ESMA publishes updated MiFID2 Investor Protection Q&A

Published: 14 November 2017


On 10 November 2017, the European Securities and Markets Authority (ESMA) published an updated Q&A on MiFID2 and MiFIR investor protection and intermediary topics. In the latest round of updates:

  • ESMA has confirmed that securities financing transactions (SFTs) are in scope of the MiFID2 requirements for order record keeping, as outlined in Article 16(6) of MiFID2 and Section 8 of the MiFID2 Delegated Regulation.
  • ESMA has also confirmed that the obligation to report on the overall value of a client’s portfolio depreciating by a 10% threshold on a particular business day (Article 62(1) of the Delegated Regulation) applies to both retail and professional clients.
  • Lastly, ESMA has clarified the legal status of a fee, commission or monetary benefit after being received by a firm and before it is transferred in full to the client. In the Q&A, ESMA confirms that once received by the firm, the amount should be considered a liability of the investment firm to return the money to the client “as soon as reasonably possible after receipt”, and reiterates that this amount cannot be used by the firm to offset fees owed by the client to the firm.

Further updates on Level 3 guidance from ESMA are expected prior to January, although in a recent in-person FCA industry update on MiFID2 implementation, the FCA acknowledged there will be limitations on firms taking additional guidance fully into account the closer we move towards the 3 January 2018 deadline. This reassurance should be taken in the context of other recent public statements from the FCA, that it expects firms to make reasonable efforts to comply. If members have any questions, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.