AMF Outlines Changes to MiFID 2 Aimed at Improving the Framework

The AMF has responded to the European Commission’s public consultation on the review of MiFID2. The regulator outlined a number of changes to MiFID 2 aimed at improving the framework.

June 10 2020 | AtoZ Markets – France’s Financial Markets Authority (AMF) today published its response to the European Commission’s public consultation on the review of MiFID 2. In its feedback, the AMF supports targeted changes of certain aspects of MiFID 2 based on five pillars. This also includes making investor protection rules more relevant and proportionate.

AMF supports targeted changes to MiFID 2

The AMF believes that there is a need for targeted changes to MiFID 2 to fully achieve its original objectives and to contribute to deepening the EU Capital Markets Union. While acknowledging the very positive contribution of MiFID 2 to the objective of investor protection, the AMF supports a number of changes aimed at improving the framework further.

The AMF proposes a number of changes in cases where an investment service is provided cross border. More specifically, where a firm provides services through a branch to retail customers in a Member State, where it is also authorized to provide the same service under the freedom to provide services, such services to retail customers should be presumed to be provided by the branch.

Moreover, while the AMF welcomes the extension of ESMA’s product intervention powers granted by the recently adopted texts in the ESA review, the AMF supports enabling ESMA to adopt product intervention decisions that would be permanent and not time-limited. It is worthy of note that AMF has voiced its concerns about the temporary nature of ESMA-introduced measures to ban the offering of CFDs to retail clients and restricting binary options. Several EU member states have subsequently implemented these measures on a permanent basis.

The AMF says it would not consider it appropriate to implement a general ban on inducements. The ban could have a detrimental effect on retail investors and also deprive them of access to sufficient advice.

On costs and charges disclosure obligations

Regarding costs and charges disclosure obligations, the AMF supports the possibility for eligible counterparties and professional clients to opt-out from receiving ex-ante and ex-post information from investment firms provided that the latter previously agree on the format and content of alternative costs disclosures with them.

With regard to product governance requirements, investment firms providing the services of reception/transmission of orders and/or execution of orders on behalf of clients, without active solicitation of potential clients, could only be required to define a distribution strategy rather than defining a full target client base, AMF says.

The regulator also proposes to adjust the criteria for treating retail clients as professional clients on request. This, however, will improve access to certain financial products. However, the French regulator opposes creating a new category of sophisticated clients. According to AMF, it would entail prohibitive compliance costs for firms. On the other hand, it would necessitate amendments to numerous pieces of EU financial services regulations.

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