ESMA has published the final report on its Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements.

The Guidelines cover various aspects of the appropriateness process, from the information to be provided to clients on the purpose of the appropriateness assessment, to the provisions necessary to understand clients and products, to the matching of clients with appropriate products and the effectiveness of warnings. In addition, other related requirements such as exemption for execution-only and record-keeping and controls are clarified.

The Guidelines will be translated into the official languages of the EU and published on ESMA’s website. The publication of the translations will trigger a two-month period during which national competent authorities must notify ESMA whether they comply or intend to comply with the Guidelines.

The Guidelines will apply six months after the date of the publication on ESMA’s website in all EU official languages.

ESMA has published its Final Report on the amendment of the Market Abuse Regulation (MAR) guidelines on delayed disclosure in relation to prudential supervision.

The Guidelines are adding certain cases to the list of legitimate interests of issuers for delaying public disclosure of inside information.

The Guidelines also introduce clarifications on the institutions’ case-by-case assessment as to whether they would be in possession of inside information in relation to the institution-specific Supervisory Review and Evaluation Process (SREP) decisions received from their prudential competent authority, with particular reference to the Pillar 2 Capital Requirements (P2R) and Capital Guidance (P2G).

The amended Guidelines clarify the following:

  • In case of redemptions, reductions and repurchases of own funds subject to supervisory authorisation, the institutions have a legitimate interest to delay the disclosure of inside information until the prudential competent authority has authorised the transactions;
  • There is a legitimate interest for the institution to delay the disclosure of the draft SREP decision informally communicated to an institution, until that decision becomes final following the completion of the decision-making process of the prudential competent authority;
  • In respect of the content of the SREP decisions, the P2R are expected to be considered as inside information and as highly likely to be price sensitive whereas P2G may only be inside information. Examples of situations where price sensitivity is expected are when: the difference between the P2G and the institution’s level of capital is not minor and is likely to involve a major reaction by the institution, such as a capital increase; and the institution’s P2G is not in line with market expectations, so a price impact can be expected.

The Guidelines will be applicable 2 months after the publication of translations.

EBA has published its Opinion on the scale and impact of de-risking in the EU and the steps competent authorities should take to tackle unwarranted de-risking.

De-risking refers to decisions taken by financial institutions not to provide services to customers in certain risk categories. De-risking can be a legitimate risk management tool but it can also be a sign of ineffective money laundering (ML) and terrorist financing (TF) risk management, with at times severe consequences.

The EBA considers that its regulatory guidance on how to manage ML/TF risks, if applied correctly, should help avert unwarranted de-risking. To further complement this guidance, the EBA identified a number of steps competent authorities and the European Commission and co-legislators could take. In particular, the EBA encourages competent authorities to engage more actively with institutions that de-risk and with users of financial services that are particularly affected by de-risking, to raise mutual awareness of their respective rights and responsibilities.

EIOPA has published its first report on the application of the Insurance Distribution Directive (IDD), which regulates how insurance products are designed and distributed in the European Union.

The Joint Committee of the European Supervisory Authorities (ESAs) – EBAEIOPA and ESMA – published today the list of identified financial conglomerates for 2021.