E.U. ESMA Proposes Guidelines for MiFID II Suitability

On 13 July, ESMA proposed guidelines on MiFID II suitability provisions.

  • Follows ESMA 2012 guidance on MiFID for suitability and compliance units.
  • Covers guidelines to enhance clarity and foster convergence in suitability requirements.
  • Key principles remain unchanged since MiFID but has strengthened certain obligations.

Suitability Requirements

  • Guidelines make reference to fact that robo-advisers do not reduce a firm’s responsibility.
  • That firms must provide a statement on suitability prior to the conclusion of transaction.
  • Further details on conduct rules for firms providing a periodic assessment of suitability.
  • Requires firms to take into account whether equivalent products might meet client needs.
  • And requires firms analyze costs and benefits of switching from an investment to another.
  • Must also consider clients’ risk tolerances and extends suitability to structured deposits.

Effectiveness

  • Comments are due by 13 October 2017.

Spain – Short Selling Ban in Liberbank S.A. Shares

On 12 July, the CNMV extended its short selling ban in shares of Liberbank S.A.

  • Extension remains for two (2) months
  • Enters into force on 12 July 2017 at 23:59 CET and applies until Sep 12.
  • Ban applies to net short positions of Liberbank SA shares under the Short Selling Reg.
  • The measure does not apply to market-making activities, hedging or trading in indices.
  • Short selling measure applies to any person, irrespective of their country of residence.
  • ISIN: ES0168675090
  • CNMV Statement

ESMA Opinion

  • ESMA opinion that circumstances of Liberbank constitute adverse scenario for Spain.

FCA Statement

  • On 13 July, the FCA issued statement supporting CNMV decision to extend short selling ban.