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ESMA publishes guidance on appropriateness and execution-only requirements under MiFID II.

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ENPNewswire-January 4, 2022--ESMA publishes guidance on appropriateness and execution-only requirements under MiFID II

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Release date- 03012022 - The European Securities and Markets Authority (ESMA), the EU's securities regulator, has today published the final report on its Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements.

These requirements constitute an important element of investor protection in the provision of investment services other than investment advice or portfolio management. Under MiFID II, investment firms providing non-advised services are required to request information on the knowledge and experience of clients or potential clients to assess whether the investment service or product envisaged is appropriate, and to issue a warning in case the investment service or product is deemed inappropriate. The execution-only framework allows for an exemption to this assessment in certain conditions, including that the firm issues a warning to the client.

The purpose of the Guidelines is to enhance clarity and to foster convergence in the application of the appropriateness and execution-only requirements. The ESMA Common Supervisory Action (CSA) conducted in 2019 showed there was a need for such convergence in the area of appropriateness and execution-only. The Guidelines cover several important aspects of the appropriateness process, spanning from the information to be provided to clients about the purpose of the appropriateness assessment, the arrangements necessary to understand clients and products, to the matching...

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