European Securities and Markets Authority issued a reminder to firms on the MiFID II reverse solicitation rulesJanuary 2021
ESMA issued the reminder on discovering some attempts by firms to avoid the MiFID rules and the protections they offer. As per Article 42 of MiFID II, where a retail client or professional client, established or situated in the Union initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm, the third country firm is not subject to the requirements under Article 39 of MiFID II.
ESMA has previously provided guidance to firms on the application of the MiFID II in these situations and outlined how the concept of a client initiating “at its own exclusive initiative the provision of an investment service or activity by a third-country firm” included in Article 42 of MiFID II should be applied.
The statement noted in particular:
- “the provision of investment services in the EU without proper authorisation in accordance with the EU and the national law applicable in Member States exposes service providers to the risk of administrative or criminal proceedings, for the application of relevant sanctions,
- when using the services of investment service providers which are not properly authorised in accordance with EU and Member States’ law, investors may lose protections granted to them under EU relevant rules, including coverage under the investor compensation schemes in accordance with Directive 97/9/EC.”
For the full statement see: ESMA Reminds Firms of the MiFID II rules on Reverse Solicitation
By: Eilish Larkin