European Securities and Markets Authority Statement on MiFID II Conduct of Business Obligations in Light of COVID-1905/06/2020The European Securities and Markets Authority has published a statement reminding firms of their MiFID II conduct of business obligations in light of a significant increase in investment accounts opened by retail clients, together with a surge in retail clients' trading activities. In particular, ESMA highlights:
- firms' obligations to act honestly, fairly and professionally in accordance with the best interests of their clients when providing investment services;
- firms' product governance obligations, which require firms to ensure only financial instruments that are in the interest of the client are offered; this involves a target market assessment, which should be done in an appropriate and proportionate manner;
- the need for firms to provide appropriate information in good time about the investment firm, its services and the financial instruments offered (including a description of the nature and risks of the financial instruments and whether it is intended for retail or professional clients), which should be fair, clear and not misleading;
- the need for firms to obtain information about a client's knowledge and experience to assess the appropriateness of a given financial instrument when the firm is providing services other than investment advice or portfolio management; and
- the fact that when firms are exempt from appropriateness assessments, they are still required to comply with the other MiFID II obligations discussed above.
View ESMA's statement on MFID II conduct of business requirements.
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