European

ESMA publish report on the 2023 cross-border provision of investment services to retail clients in the EU and EEA

On 15 July 2024, the European Securities and Markets Authority (ESMA) published its report on the 2023 cross-border provision of investment services to retail clients in the EU and EEA (the report).

The report findings detail that the European market for cross-border provision of investment services in 2023 involved 386 firms across 30 EU/EEA Member States. These firms provided services to about 8m retail clients in other Member States. In comparison to 2022, the cross-border market for investment services in the EU/EEA grew by 1.6% in terms of firm numbers, by 5% in terms of retail clients’ number, while the number of complaints increased by 31%.

ESMA launch consultation on firms’ order execution policies under MiFID II

On 16 July 2024, ESMA published a consultation on draft technical standards specifying the criteria for how investment firms establish and assess the effectiveness of their order execution policies.

ESMA is seeking input from stakeholders on:

• the establishment of an investment firm’s order execution policy
• the investment firm’s procedures/processes to monitor and assess the effectiveness of its order execution arrangements and order execution policy on a regular basis
• the investment firm’s execution of client orders through own account dealing
• how an investment firm should deal with client instructions

The consultation is set to run until 16 October 2024.

EBA publish report on structured deposits in the EU under MiFIR

On 19 July 2024, the EBA published a report on structured deposits in the EU (the report) under Regulation (EU) 600/2014 (Markets for Financial Instruments Regulation (MiFIR)). 

The findings published in the report outlines that in more than half of the 27 national markets in the EU, structured deposits do not exist, and that the EU market remains very small at an aggregate level. The total amount of structured deposits sold between 1 January and 30 September 2023 amounted to only €16.7bn, with 95% concentrated in only four EU Member States.

The report also outlines that the annual net returns for structured deposits vary significantly, with some structured deposits offering no return, while others showing positive returns, in one case up to 24%.

ESMA launch consultations under MiFIR

On 10 July 2024, ESMA published a package of public consultations with the aim of increasing transparency and system resilience in financial markets, as well as reducing the reporting burden.

The consultations published includes:

1. amendments to rules on the liquidity assessment for equity instruments, on equity transparency and on the volume cap 
2. a draft of the new implementing technical standard (ITS) on systematic internalisers (SIs)
3. a section on the equity CTP in relation to the input/output data, to ensure full alignment between the transparency requirements and the CTP specifications  
4. a section on flags to be used in the post-trade transparency reports for non-equity instruments which was missing in the previous consultation  
5. new rules specifying organisational requirements of trading venues, adding new provisions on circuit breakers and with targeted amendments to adapt to the DORA framework 

The consultations are set to run until 15 September 2024 in relation to the technical advice (Section 3), RTS 1 (Section 4), the RTS on input/output data for shares and ETFs CTP (Section 8) and the flags under RTS 2. By 15 October, submissions are to be completed in relation to the SI ITS (Section 5), RTS 3 (Section 6) and RTS 7 (Section 7).

ESMA launch consultation on reporting requirements and governance expectations for certain supervised entities

On 8 July 2024, ESMA launched two consultations, one on period reporting and the other on supervisory expectations for management bodies. The consultations request feedback from certain entities supervised by ESMA, namely; benchmark administrators, credit rating agencies, and three types of market transparency infrastructures (securitisation repositories under SECR, trade repositories under EMIR/SFTR, and data reporting service providers under MiFiR). 

The consultation on periodic reporting outlines the information ESMA expects to receive and includes a timeline for supervised entities to provide the required information. The consultation on supervisory expectation for management bodies, outlines ESMA’s expectations on governance arrangements and seeks feedback from systemically important third country central counterparties.

ESMA is set to consider the feedback received to both consultations by 18 October 2024 and is expected to publish a final report in Q1 2025. 

For more information on these topics please contact any member of A&L Goodbody's Asset Management & Investment Funds team.

This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.