On 6 November 2018, the European Securities and Markets Authority (ESMA) issued guidelines on certain aspects of the MiFID II suitability requirements. At the end of December 2020, the European Securities and Markets Authority (ESMA) published its final report on its guidelines on outsourcing to cloud service providers (CSP). If you think: "but surely those guidelines are for national regulators and not for me as an investment company?" then you are right. On 8 July 2022, the product governance consultation paper (the CP) was duly published. Notifications should be sent by submitting the form available on the EBA website to compliance@eba.europa.eu with the reference 'EBA/GL/2021/06' and the form available on the ESMA website to managementbody.guidelines@esma.europa.eu with the reference 'ESMA35-36-2319'. 13 Apr 2022 The European Insurance and Occupational Pensions Authority (EIOPA) has launched today a public consultation on draft Guidelines on integrating the customer's sustainability preferences in the suitability assessment under the IDD. EBA and ESMA published joint guidelines to assess the suitability of members of management bodies and key function holders. ESMA consulted on the draft suitability assessment guidelines between January and April 2022. Invest Europe supports the Commission's (EC) work to ensure that material sustainability factors are assessed, consistently taken into account and disclosed by institutional investors and asset managers. In the Sustainable Finance Roadmap 2022-2024 dated 10 February 20223 ESMA has stated: .. Investor education also plays a role in making sure that product offerings related to ESG investing can be properly understood, for example in relation to the sustainability impact of different investment strategies put in place to integrate ESG factors. AMF: Adoption of ESMA's Guidelines on Suitability and Execution-Only Requirements Under MiFID II. This will ensure that clients can make an informed investment decision. The consultative guidelines seek to enhance clarity and converge aspects of appropriateness and execution only requirements and the suitability provisions under MiFID II. The suitability guidelines in the final report build on the original text of ESMA's 2012 MiFID I guidelines on suitability, which have been largely revised and broadened, in order to: consider technological developments of the advisory market, notably the increasing use of automated or semi-automated systems for the provision of investment . The assessment of suitability is one of the most important requirements for investor protection in the MiFID II framework. Introduction. ESMA consulted more in particular on the idea that the information about clients' ESG preferences gathered by investment firms should be sufficiently granular to allow the investment firm to assess the suitability of the investment and must also be . Download the Position Paper in PDF. 27 April 2022 The Association for Financial Markets in Europe (AFME) and the International Swaps and Derivatives Association (ISDA), (together the "Associations") the opportunity to comment on the draft ESMA welcome guidelines on sustainability aspects of the MiFID II suitability requirements. Furthermore, ESMA has yet to update its guidelines on certain aspects of the suitability requirements including freshly implemented sustainability preferences. The proposed suitability guidelines link back into individual products with a specific ESG objective. June 27, 2022. ESMA Consults on ESG-Related Amendments to Its Suitability Guidelines By Latham & Watkins on February 11, 2022 Environmental, Social and Governance (ESG) Proposed changes seek to reflect the integration of sustainability considerations into MiFID II. March 8, 2022. 8 This includes notably ESMA Product Governance Guidelines and the ESMA Suitability Guidelines. AFG: Response to the European Commission's Public Consultation on ESG Ratings. in the final ESMA guidelines ensuring that investment firms can use "plain language" when discussing sustainable finance (rather than the legal concepts) and are allowed to explain why certain expectations cannot be met and suggest "best matching" alternatives instead. The European Securities and Markets Authority (ESMA), the EU's Securities Markets Regulator, has published its Final Report on Guidelines on certain aspects of the MiFID II suitability requirements]. The EACB welcomes the opportunity to participate in the ESMA's public consultation (ESMA35-43-2998) on guidelines on certain aspects of the MiFID II suitability requirements. Preparatory Guidelines on product oversight and governance arrangements by insurance undertakings and insurance distributors. However, AFM applies the guidelines in its supervision of your company. Ms. Collins focuses on financial services regulatory advice and has experience advising an array of financial institutions on complex regulatory matters. the proposed update to the guidelines states that firms will need to collect information on clients' preferences in relation to the different types of sustainable investment products included in. ESMA - European Securities and Markets Authority. Guidelines on methodology, oversight function and record keeping under the Benchmarks Regulation. The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) published their revised final joint Guidelines on the assessment of the suitability of members of the management body and key function holders in particular with regard to money laundering and financing terrorism risks, and gender diversity. The European Securities and Markets Authority (ESMA) is consulting on updates to its Guidelines on the MiFID II suitability requirements, in light of upcoming changes that will embed . Introduction. Proposed Guidelines on certain aspects of the MiFID II suitability requirements As a result, the Luxembourg-based supervising watchdog the Commission de Surveillance du Secteur Financier (CSSF) warned the investment community to adhere to the new rules. In general, ESMA's Guidelines together with Delegated Regulation 1253/2021, Taxonomy and SFDR compose a very complicated regime for the market participants. The purpose of the guidelines is to help firms identify, address and monitor . The core part of this package are the amendments to MiFID II which apply from 2 August 2022, except for the product governance requirements which will apply from 22 November 2022 (see our briefing ). The Guidelines apply to all institutions, independent [] In order to facilitate readability, the paragraphs of the guidelines that have been updated in the review have been underlined by ESMA. Statement date 25 Apr 2022. 1d Edited. Under the proposed changes, ESG or sustainability preferences will be included in these assessments. This is a first important item which ESMA proposed to address in its Suitability Guidelines. One of the key risks that arises here is that the questionnaire is worded, or appears to be worded, in a way that attempts to influence clients to opt for sustainability preferences that match the products which the . ESMA Guidance ESMA has provided some useful guidance on this issue in its revised guidelines on MIFID II suitability requirements that are currently under consultation. 9 The legislative draft finds adjustments are necessary in order to provide clarity to the legal practice of the regulation, which in itself is directly and immediately applicable (see p. 3 of the Draft) 10 (Drucksache 51/21). On April 27, 2022, ISDA and the Association for Financial Markets in Europe submitted a joint response to the European Securities and Markets Authority's consultation on its draft guidelines on sustainability aspects of the Markets in Financial Instruments Directive (MIFID II) suitability requirements. ESMA Guidelines on certain aspects of the MiFID II suitability requirements. some much needed clarity on the implementation of #MiFIDII suitability guidelines from European Securities and Markets Authority (ESMA) Advice includes: - application of minimum/maximum . Following amendments to the MiFID II Regulation with regard to ESG financial products, the ESMA opened a public consultation in order to complete and update its guidelines. Integrating sustainability preferences in the suitability assessment. Notifications should be submitted by persons with appropriate authority to . The Report addresses key issues AIMA raised on behalf of members in our response to the consultation in October 2017, as follows: ESMA has provided additional explanation on how . Article 54 (Suitability Assessment and Suitability Reports) contains even more specifications on the suitability statement for the ESG preferences. The ESMA draft guidelines specifically state that firms should not influence clients' answers to suitability questionnaires. Moreover, ESMA had already published guidelines for specific aspects of the suitability requirements on 6 November 2018. September 26, 2017. ESMA issues Consultation Paper for Guidelines on certain aspects of the MiFID II suitability requirements 27 January 2022 The assessment of suitability is one of the most important requirements for investor protection in the MiFID II framework. As from 2 August 2022, . 1 Cf. Date 23/09/2022. By Nicola Higgs, Anne Mainwaring, Dianne Bell, and Charlotte Collins According to ESMA, the consultation is taking place in order to update MiFID II's guidelines following amendments to MiFID II relating to sustainability. Charlotte Collins is the knowledge management lawyer in the Financial Regulatory Practice of Latham & Watkins' London office, and a member of the Global Financial Institutions Industry Group. ESMA Intention At Neuroprofiler, we are keen to make the coming impactful legal framework more accessible and clearer for all stakeholders. The European Securities and Markets Authority (ESMA) has issued a consultation on aspects of suitability requirements under the Markets in Financial Instruments Directive (MiFID II). The European Securities and Markets Authority (ESMA) has issued a consultation on aspects of suitability requirements under the Markets in Financial Instruments Directive (MiFID II). MiFID2: ESMA consults on suitability guidelines ESMA has launched a consultation on proposed updates to its . The draft guidelines are set out in Annex III of the consultation paper. However, it is crucial that an accepted definition of "sustainability" (eg Brundtland report) is used and the scope captures all aspects . Comments are due by 31 March 2022. The Guidelines aim to help firms and competent authorities identify, address and monitor the risks and challenges arising from cloud outsourcing arrangements, from making the decision to outsource, selecting a cloud service provider ( CSP ), to monitoring outsourced activities and providing for exit strategies. The final guidelines are expected to be published after the 2 August 2022 timeline for implementing Delegated Regulation 2021/1253. Earlier today (27 January 2022) ESMA published a consultation paper with proposed revisions to the current MiFID II suitability guidelines, to reflect the upcoming EU MiFID II ESG changes and . The main changes to the guidelines proposed by ESMA concern the integration of clients' sustainability preferences in the assessment of the suitability of investment advice and discretionary portfolio management decisions, following the adoption of the Commission Delegated Regulation 2021/1253 of 21 April 2021. AMF: Adoption of ESMA's Guidelines on Suitability and Execution-Only Requirements Under MiFID II Summary. The regulation should be simple enough to . Click here to read more on these Guidelines. ESMA consults on embedding ESG factors into MiFID II suitability assessments. The assessment of suitability is one of the most important requirements for investor [] 2 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a This is because we believe that such guidance can serve as a necessary accompaniment to the upcoming Delegated Act (EU) 2021/1253 . The assessment of suitability is one of the most important requirements for investor protection . The draft Guidelines aim at further improving and harmonising suitability assessments within the EU financial sectors and so ensure sound governance arrangements in financial institutions. Similarly, ESMA is consulting on the review of the product governance guidelines. The consultation version of the revised Suitability Guidelines now explicitly provides that ESG factors are to be taken into account in investment advice and portfolio management in the future. For both amendments ESMA proposes a principle-based approach with a simple reference to "ESG preference" being included in the relevant articles. The CSSF notes, however, that even in the absence of the finalised guidelines, it expects Concerned Entities: . I. In the second part, ESMA proposes to amend the RTS to improve the efficiency of APC margin measures by providing further granularity on the design and the use of specific tools. ESMA guidelines namely to ensure that ESG investment decisions are made within the target market of specific financial products/instruments, numerous challenges remain when picturing the specific implementation of the DA with its dedicated concepts set out under the rules 7a-7c in practice. The Guidelines apply to investment firms, UCITS management companies and credit institutions ("Relevant Entities") that provide the investment services of investment advice and/or portfolio management (to retail clients and in some circumstances . According to Art 73 of the EIOPA Regulation referring to language arrangements, EIOPA issues its Guidelines in all EU official languages (with the exception of Irish, according to Council Regulation (EU) No 1257/2010). In addition, the complementing revision of ESMA's "product governance" guidelines, defining the ESG target market data, is still missing, even though advisers build their suitability assessments on this data being provided by product manufacturers. The other non-underlined paragraphs of the guidelines have remained unchanged compared to the 2018 version. EBA and ESMA publish final guidance on fit and proper requirements 02 July 2021 The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published today their revised final joint Guidelines on the assessment of the suitability of members of the management body and key function holders. On 31 January 2022, ESMA published a consultation paper with proposed amendments to the suitability guidelines to reflect these MiFID II changes. 23 September 2022. When it finalises its suitability guidelines, ESMA will look to align these with its Guidelines on appropriateness and execution only (published as a Final Report on 3 January 2022) where there are common provisions under MiFID for both the assessment of suitability and appropriateness. Pursuant to EU Directive 2014/65/EU (MiFID II), the guidelines specify how authorities and firms should provide investment advice and portfolio management to retail clients. The ESMA guidelines apply in relation to Article 25 (2) of MiFID II and Articles 54 and 55 of MiFID II Delegated Regulation and apply to the provision of the following investment services by investment firms: investment advice ESMA could use the opportunity of collecting feedback and drafting guidance to raise these issues with the European . ("ESMA") is finalising the update of its Guidelines on certain aspects of the MiFID II suitability requirements. The European Securities and Markets Authority (ESMA), the EU's Securities Markets Regulator, has published its Final Report on. It proposes ranking and grouping products across a spectrum for the three investor sustainability preference categories. MACOMP in Germany. In our response, we provide feedback aimed at improving the draft guidelines and we point out several level 1 issues which have strong implications for the integration of sustainability considerations in the suitability test. 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