ESMA35-43-349 — Q&A on MiFID II and MiFIR investor protection and inter...
Q&A on MiFID II and MiFIR investor protection and intermediaries topics
Authority
ESMA
Reference
ESMA35-43-349
Legal basis
MiFID II and MiFIR (investor protection and intermediaries)
Status
In force
Published
15 December 2023
Source
Documents
Questions and Answers
On MiFID II and MiFIR investor protection and intermediaries topics
Please note that this document is not updated after 31 December 2023. For Q&As issued from 1 January 2024, please search in the ESMA Q&A IT-tool.
Table of Contents
1
Best execution [Last update: 3 October 2019]...............................................................19
2
Suitability and appropriateness [Last update: 28 March 2019].......................................37
3
Recording of telephone conversations and electronic communications ........................... [Last update: 3 October 2017] .......................................................................................46
4
Record keeping [Last update: 10 November 2017]........................................................54
5
Investment advice on an independent basis [Last update: 3 October 2018] ..................55
6
Underwriting and placing [Last update: 16 December 2016]..........................................57
7
Inducements (research) [Last update: 12 July 2018] .....................................................60
8
Post-sale reporting [Last update: 23 March 2018] .........................................................74
9
Information on costs and charges [Last update: 15 December 2023] ............................80
10
Appropriateness / Complex Financial Instruments [Last update: 6 June 2017].........102
11
Client categorisation [Last update: 25 May 2018].....................................................103
12
Inducements [Last update: 28 May 2020] ................................................................107
13
Provision of investment services and activities by third country firms ........................... [Last update: 28 March 2019] ..................................................................................117
14
Application of MiFID II after 3 January 2018, including issues of 'late transposition [Last update: 18 December 2017]............................................................................122
15
Other issues [Last update: 3 October 2019].............................................................125
16
Product governance [Last update: 19 November 2021] ...........................................128
17
Product intervention [Last update: 4 December 2019]..............................................130
18 MiFID practices for firms selling financial instruments subject to the BRRD regime [Last update: 18 February
resolution 2020].............................................................................131
Acronyms and definitions used
AIF
Alternative Investment Funds
BRRD 2
Directive 2019/879 of the European Parliament and of the Council
ESMA
The European Markets and Securities Authority
ITS
Implementing Technical Standards
KID
Key Information Document
MiFID I
Markets in Financial Instruments Directive - Directive 2004/39/EC of the European Parliament and of the Council
MiFID II
Markets in Financial Instruments Directive (recast) - Directive 2014/65/EU of the European Parliament and of the Council
MiFIR
Markets in Financial Instruments Regulation - Regulation 600/2014 of the European Parliament and of the Council
MTF
Multilateral Trading Facility
OTC
Over The Counter
OTF
Organised Trading Facility
Q&A
Question and Answer
PRIIPs
Package Retail and Insurance-based Products
RPA
Research Payment Account
RTS
Regulatory Technical Standards
SFTs
Securities financing transactions
UCITS
Undertakings for Collective Investment in Transferable Securities
Table of questions
Best Execution
1
'Reasonable steps' Vs 'sufficient steps'
Art. 27 of MiFID II
10/10/2016
Best Execution
2
Checking fairness of prices when executing orders or decisions in OTC products
Art. 27 of MiFID II Art. 64(4) of the MiFID II Delegated Regulation
10/10/2016
Best Execution
3
Use of a single venue
RTS 27 1 Art. 24(1) of MiFID II Art. 27 of MiFID II
16/12/2016
Best Execution
4
Accessibility of reports
RTS 27, RTS 28 2 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
16/12/2016
Best Execution
5
Latest date for publication of reports
RTS 28 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
16/12/2016
Best Execution
6
MiFID II and timing of publication of reports
RTS 27, RTS 28 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
4/4/2017
Best Execution
7
Reports for services of order execution and reception and transmission of orders
RTS 28 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
16/12/2016
Best Execution
8
Disclosure of reports to public
RTS 27, RTS 28 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
3/10/2019
Best Execution
9
Venue disclosure of costs
RTS 27 Art. 27(3) of MiFID II
16/12/2016
Best Execution
10
Summary of the analysis and conclusions from a firm's execution monitoring
RTS 28 Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation
16/12/2016
11
Information to be published on entities within a group
Art. 65(6) of the MiFID II Delegated Regulation RTS 28
4/4/2017
12
Transactions with eligible counterparties and RTS 27
RTS 27 Art. 27 of MiFID II
4/4/2017
13
Execution policies for investment firms or market operators operating OTFs
Art. 20 of MiFID II Art. 27 of MiFID II
4/4/2017
14
Information on passive and aggressive orders in the context of portfolio management and RTO
Art. 27 of MiFID II Art. 65(6) of the MiFID II Delegated Regulation RTS 28
4/4/2017
15
Securities Financing Transactions (SFTs)
RTS 27 Art. 1(5)(a) of MiFIR
10/07/2017
16
Application of best execution to OTF operators
Art. 27 of MiFID II
3/10/2017
17
Disclosure of quality of execution when using direct electronic access
Art. 27 of MiFID II RTS 28
3/10/2017
18
Definition of 'other liquidity provider'
RTS 27
25/05/2018
19
Reporting for firms using a venue's RFQ system to agree a trade
RTS 28
3/10/2018
20
RTS 27 reporting requirements for market makers and other liquidity providers
RTS 27
28/03/2019
21
Reporting for venues on the 'trading mode' according to RTS 27
RTS 27
29/05/2019
22
Reporting for venues and firms on template fields of RTS 2 and 28 if the required content is not applicable to their activities
RTS 2 and 28
29/05/2019
23
Reporting on 'passive' and 'aggressive' orders for firms using quote-driven systems to have client orders executed
RTS 28
29/05/2019
24
RTS 28 reporting and third-country execution venues
RTS 28
29/05/2019
25
Classification of financial instruments under RTS 27 if ESMA has not published any calibrated market sizes
RTS 27
11/07/2019
2
Suitability report: record of when the advice is given
Art. 25(6) of MiFID II
10/10/2016
3
Suitability report: availability on firm's website
Art. 25(6) of MiFID II Art. 3 of the MiFID II Delegated Regulation
28/3/2019
4
Suitability report: provision to the client together with the report due when carrying out an order on behalf of a client other than for portfolio management
Art. 25(6) of MiFID II
10/10/2016
Suitability and Appropriateness
5
Suitability report: advice not to buy or sell a financial instrument
Art. 25(6) of MiFID II
10/10/2016
Suitability and Appropriateness
6
Transactions on unsuitable products
Art. 25(2) of MiFID II
10/10/2016
Suitability and Appropriateness
7
Disclosure of information by the client on his/her financial situation
Art. 25(2) of MiFID II Art. 54 of the MiFID II Delegated Regulation
10/10/2016
Suitability and Appropriateness
8
Record keeping obligations related to investment advice
Art. 16(6) of MiFID II Art. 16(7) of MiFID II Art. 25(6) of MiFID II
16/12/2016
Suitability and Appropriateness
9
Periodic reporting of how the investment meets the client's preferences, objectives and other characteristics of the retail client
Art. 25(6) of MiFID II Art. 60 of the MiFID II Delegated Regulation
18/12/2017
Suitability and Appropriateness
10
Suitability report: Use of generic statements
Art. 25(6) of MiFID II Art. 54(12) of the MiFID II Delegated Regulation
28/3/2019
Recording telephone conversations and communications
1
Recording of internal telephone conversations and electronic communications
Art. 16(7) of MiFID II
10/10/2016
Recording telephone conversations and communications
2
Charging clients for access to recordings
Art.16(7) of MiFID II
10/10/2016
Recording telephone conversations and communications
3
Monitoring of records
Art.16(7) of MiFID II Art. 76(6) of the MiFID II Delegated Regulation
10/10/2016
Recording telephone conversations and communications
4
Period of record keeping
Art.16(7) of MiFID II
10/10/2016
Recording telephone conversations and communications
5
Types of electronic communications in scope of the requirements
Art.16(7) of MiFID II
10/10/2016
7
Recording of telephone conversations and electronic communications: critical or important operational function
Art.16(7) of MiFID II
10/10/2016
8
Recording of telephone conversations and electronic communications from start to end
Art.16(7) of MiFID II
10/10/2016
9
Client access to relevant internal conversations
Art.16(7) of MiFID II
10/10/2016
10
Use of mobile devices
Art.16(7) of MiFID II Art. 76 of the MiFID II Delegated Regulation
10/10/2016
11
Telephone conversations and electronic communications that should be recorded
Art.16(7) of MiFID II Art. 76 of the MiFID II Delegated Regulation
10/10/2016
12
Scope of activities covered by the requirements in Article 16(7) of MiFID II (1)
Art.16(7) of MiFID II
10/07/2017
13
Scope of activities covered by the requirements in Article 16(7) of MiFID II (2)
Art.16(7) of MiFID II
3/10/2017
Record keeping
1
Encryption
Arts. 16(6), 16(7) of MiFID II Art. 72 of the MiFID II Delegated Regulation
10/10/2016
Record keeping
2
Securities financing transactions (SFTs)
Art. 16(6) of MiFID II
10/11/2017
Investment advice on an independent basis
1
Assessment and comparison of a sufficient range of financial instruments
Arts. 24(4), 24(7)) of MiFID II Arts. 52, 53 of the MiFID II Delegated Regulation
10/10/2016
Investment advice on an independent basis
2
'Look-through' approach
Art. 24(7) of MiFID II
3/10/2018
1
Various funding alternatives
Art. 38(1) of the MiFID II Delegated Regulation
10/10/2016
2
Information on investor clients to be provided to issuer clients
Art. 38(1) of the MiFID II Delegated Regulation
16/12/2016
3
Record Keeping
Art. 43 of the MiFID II Delegated Regulation
16/12/2016
Inducements (research)
1
Use of a Research Payment Account for more than one client's portfolio or account
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
10/10/2016
Inducements (research)
2
Status of client money held in a Research Payment Account
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
16/12/2016
Inducements (research)
3
Unrequested research provided 'free of charge'
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
16/12/2016
Inducements (research)
4
Research from third-country providers
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
16/12/2016
Inducements (research)
5
Research from another group entity
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
16/12/2016
Inducements (research)
6
Minor non-monetary benefit vs. research
Art. 24 of MiFID II Art. 12(3) and Art. 13 of the MiFID II Delegated Directive
16/12/2016
Inducements (research)
7
'Corporate access'
Art. 24 of MiFID II Art. 12(3) and Art. 13 of the MiFID II Delegated Directive
4/4/2017
Inducements (research)
8
Macro-economic analysis
Art. 24 of MiFID II Art. 12(3) and Art. 13 of the MiFID II Delegated Directive
23/3/2018
Inducements (research)
9
Research related to fixed-income, currencies or commodities
Art. 24 of MiFID II Art. 12(3) and Art. 13 of the MiFID II Delegated Directive
23/3/2018
Inducements (research)
10
Budgeting, allocation of the research budget, determination and assessment of payments made from it
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
4/4/2017
Inducements (research)
11
Disclosure of client research charges
Art. 24 of MiFID II Art. 13 of the MiFID II Delegated Directive
4/4/2017
Inducements (research)
12
Free trial periods
Art. 24 of MiFID II Art. 12(2), !2(3) and 13 of the MiFID II Delegated Directive
12/7/2018
Post-sale reporting
2
Cash withdrawals by the client
Art. 62 of the MiFID II Delegated Regulation
16/12/2016
Post-sale reporting
3
Reporting on the depreciation of leveraged financial instruments or contingent liability transactions
Art. 62 of the MiFID II Delegated Regulation
16/12/2016
Post-sale reporting
4
Reporting on portfolio depreciation in case of client additions to the portfolio
Art. 62 of the MiFID II Delegated Regulation
6/6/2017
Post-sale reporting
5
Reporting on the depreciation of financial instruments with no secondary market or daily price reference
Art. 62 of the MiFID II Delegated Regulation
6/6/2017
Post-sale reporting
6
Value and commencement of reporting requirement
Art. 62 of the MiFID II Delegated Regulation
6/6/2017
Post-sale reporting
7
Reporting on the depreciation : choice of value for the threshold calculation
Art. 62 of the MiFID II Delegated Regulation
6/6/2017
Post-sale reporting
8
Flexibility allowed by client agreement (1)
Art. 62 of the MiFID II Delegated Regulation
3/10/2017
Post-sale reporting
9
Flexibility allowed by client agreement (2)
Art. 62 of the MiFID II Delegated Regulation
3/10/2017
Post-sale reporting
10
Reporting to retail and professional clients
Art. 62 of the MiFID II Delegated Regulation
10/11/2017
Post-sale reporting
11
Holding a retail client account
Art. 62 of the MiFID II Delegated Regulation
23/3/2018
Post-sale reporting
12
Reporting on the depreciation: exceeding same threshold during a reporting period
Art. 62 of the MiFID II Delegated Regulation
23/3/2018
Information costs
1
Ex-post disclosure of total costs and charges
Art. 24 of MiFID II Art. 50(9) of the MiFID II Delegated Regulation
16/12/2016
Information costs
2
Illustration of the cumulative effect of costs on return
Art. 24 of MiFID II Art. 50(10) of the MiFID II Delegated Regulation
16/12/2016
Information costs
3
Ex-post disclosure of the cumulative effect of costs on return
Art. 24 of MiFID II
16/12/2016
4
Periodicity of ex-post information on total costs and charges
Art. 24 of MiFID II Art. 50(9) of the MiFID II Delegated Regulation
16/12/2016
5
Voluntary periodical ex-post information on total costs and charges
Art. 24 of MiFID II Art. 50(9) of the MiFID II Delegated Regulation
16/12/2016
6
Cost components of products and PRIIPs calculation methodology
Art. 24 of MiFID II Art. 50(2) of the MiFID II Delegated Regulation
6/6/2017
7
Use of products' costs presented in the PRIIPs KID
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
28/3/2019
8
PRIIPs calculation methodology for instruments outside the scope of PRIIPs
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
6/6/2017
9
Cost calculation: access to relevant data
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
6/6/2017
10
Cost of products falling within the PRIIPs transition period
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
6/6/2017
11
Unavailability of manufacturer data on costs
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
6/6/2017
12
Cost of transactions initiated in the provision of an investment service
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
6/6/2017
13
Aggregation of costs and charges
Art. 24 of MiFID II Art. 50(2) of the MiFID II Delegated Regulation
15/12/2023
14
Ex-ante disclosure and unavailability of actually incurred costs
Art. 24 of MiFID II Art. 50(8) of the MiFID II Delegated Regulation
6/6/2017
15
Calculation of ex-ante transaction costs
Art. 24 of MiFID II Art. 50(8) of the MiFID II Delegated Regulation
3/10/2017
16
Price of the position of the investment firm
Art. 24 of MiFID II
3/10/2017
18
Eligible counterparties not intending to offer financial instruments to clients
Art. 24 of MiFID II Art. 50(1) of the MiFID II Delegated Regulation
3/10/2017
19
Specific limitations to cost disclosure for eligible counterparties and professional clients
Art. 24 of MiFID II Art. 50(1) of the MiFID II Delegated Regulation
3/10/2017
20
Disclosure in case of zero costs and charges
Art. 24 of MiFID II
3/10/2017
21
Timing of first annual ex-post reports on costs and charges
Art. 24 of MiFID II Art. 50(9) of the MiFID II Delegated Regulation
3/10/2017
22
Level of individualisation of ex-ante information
Art. 24 of MiFID II Art. 50(2) of the MiFID II Delegated Regulation
28/3/2019
23
Conditions to be met to use costs grids/tables for ex-ante information
Art. 24 of MiFID II Art. 50(2) and (6) of the MiFID II Delegated Regulation
28/3/2019
24
Ex-ante information for the service of portfolio management
Art. 24 of MiFID II Art. 50(2) and (5) of the MiFID II Delegated Regulation
28/3/2019
25
Terminology
Art. 24 of MiFID II Annex II of the MiFID II Delegated Regulation
28/3/2019
26
Taxes to be included in the ex-ante and ex-post costs and charges information
Art. 24 of MiFID II Annex II of the MiFID II Delegated Regulation
28/3/2019
27
Ex-ante information in case of sell orders
Art. 24 of MiFID II Art. 50(6) and (10) of the MiFID II Delegated Regulation
29/05/2019
28
Ex-ante information in case of telephone trading
Art. 24 of MiFID II Art. 50 of the MiFID II Delegated Regulation
29/05/2019
29
Use of assumed investment amounts for ex-ante information in relation to investment services and/or products with non-linear charging structures
Art. 24 of MiFID II Recital 78 and Art. 50(2) of the MiFID II Delegated Regulation
29/05/2019
31
Information on costs and charges: Ex-post information for the service of portfolio management
Art. 24 of MiFID II Art. 50(9) of the MiFID II Delegated Regulation
4/12/2019
32
Ex-post information under Article 50(9) of the Delegated Regulation and its relationship with information under Article 60 of the Delegated Regulation
Art. 24 and 25 of MiFID II Art. 50(9) and 60 of the MiFID II Delegated Regulation
4/12/2019
33
Fair, clear and not misleading presentation of costs and charges
Art. 24(3) of MiFID II
21/12/2020
34
Timing ex-ante information investment advice and RTO/execution services relating to same transaction(s)
Art. 24(4) of MiFID II and Art. 50(5) of the MiFID II Delegated Regulation
28/05/2021
35
Foreign currency
Art. 50(3) of the MiFID II Delegated Regulation
15/12/2023
Appropriateness / complex financial instruments
1
Financial instruments complex per se: non-UCITS collective investment undertakings
Art. 25(4) of MiFID II Art. 57 of the MiFID II Delegated Regulation
6/6/2017
Client categorisation
1
Information to clients on categorisation
Art. 45(1) of the MiFID II Delegated Regulation
3/10/2017
Client categorisation
2
Clients who may be treated as professionals on request (1)
Section II.1 of Annex II of MiFID II
25/05/2018
Client categorisation
3
Clients who may be treated as professionals on request (2)
Section II.1 of Annex II of MiFID II
25/05/2018
Client categorisation
4
Clients who may be treated as professionals on request (3)
Section II.1 of Annex II of MiFID II
25/05/2018
Client categorisation
5
Clients who may be treated as professionals on request (4)
Section II.1 of Annex II of MiFID II
25/05/2018
Client categorisation
6
Clients who may be treated as professionals on request (5)
Section II.1 of Annex II of MiFID II
25/05/2018
Inducements
1
Payments made to a third party in relation to the provision of
Art. 24(9) of MiFID II
10/11/2017
3
Performance of the function of investment management or portfolio management of one or more investment funds for a UCITS management company or an AIF Manager
Art. 24(7)(b) of MiFID II Art. 24(8) of MiFID II Art. 24(9) of MiFID II
18/12/2017
4
Performance of marketing function for a UCITS management company or an AIF Manager
Art. 24(7)(b) of MiFID II Art. 24(8) of MiFID II Art. 24(9) of MiFID II
18/12/2017
5
Performance of administration function for a UCITS management company or an AIF Manager
Art. 24(7)(b) of MiFID II Art. 24(8) of MiFID II Art. 24(9) of MiFID II
18/12/2017
6
Application of inducements rules to financial instruments in which the firm has invested on behalf of the client before 3 January 2018
Art. 24(8) of MiFID II
23/3/2018
7
Minor non-monetary benefits