On 12 January 2017, the European Securities and Markets Authority (ESMA) issued an Opinion calling for consistent application of the product intervention powers under the Markets in Financial Instruments Regulation (MiFIR).

From 3 January 2018, ESMA and NCAs will have the power to temporarily prohibit or restrict investment firm’s marketing, distribution or sale of:

  • Units or shares in UCITS and Alternative Investment Funds (AIFs); and
  • Financial instruments with certain specified features.

Currently, the powers will only apply to MiFID investment firms marketing products which pose risks to retail investors, market integrity, and financial stability in the EU, but do not cover UCITS management companies and Alternative Investment Fund Managers (AIFMs). ESMA is concerned about the potential for regulatory arbitrage and the potential reduction in effectiveness of future intervention measures, and believes that the EU institutions should address this issue, particularly in relation to those instances where a type of fund that is restricted or banned under MiFIR could be distributed through fund management companies, if they decided to market or distribute the funds themselves.

[source: ESMA]