EU Consultation on Guidelines on Compliance Function Requirements under MiFID II

The European Securities and Markets Authority has published a consultation paper on proposed guidelines on the compliance function requirements that are set out in the revised Markets in Financial Instruments package. The consultation closes on October 15, 2019 and ESMA intends to publish its final guidelines in Q2 2020. The final guidelines will replace ESMA's guidelines that were issued in 2012 under MiFID I because some of the 2012 guidelines are now set out in MiFID II or its secondary legislation and so reflect the enhanced role of the compliance function under MiFID II.

MiFID II requires investment firms to have a robust governance framework. Firms must implement systems and controls, policies and procedures to manage risks and ensure compliance, including regulatory compliance and the establishment of an independent and effective compliance function. MiFID II strengthened the compliance function requirements that were in MiFID I, including by providing that the compliance function has certain responsibilities for the firm's product governance requirements and requiring the compliance function to advise the firm's management body on the firm's remuneration policies.

ESMA is seeking feedback on its proposed re-organization and content of the draft guidelines, including whether further clarification is needed on certain aspects.

View the consultation paper.

View the 2012 guidelines.

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