The European Securities and Markets Authority (ESMA) published Technical Advice to the Commission on the effects of product intervention measures on the 4th February 2020. ESMA is empowered under Regulation (EU) No 600/2014 (‘MiFIR’) to issue temporary product intervention measures which prohibit or restrict the marketing, distribution or sale of financial instruments in order to strengthen investor protection. Two product intervention measures were put into place in relation to Contracts for Differences (CFDs) and binary options which expired on the 31st July 2019 and 1st July 2019 respectively. ESMA was requested to provide the European Commission with technical advice on product intervention measures, in order to enable the Commission to compile a report to be presented to the European Parliament and the Council.
In its technical advice, ESMA requested the Commission to address the arbitrage risk between MiFID firms and fund management companies whereby ESMA and NCAs should be able to directly apply restrictions to such companies. ESMA also provided advice on measures to achieve uniform application of product intervention measures by NCAs across the EU by converting temporary measures into permanent ones. Furthermore, the European Commission is advised to provide clarity on the applicability of product intervention measures to firms which operate in multiple Member States. The technical advice also includes proposed changes to facilitate the implementation of national product intervention measures.
The full report may be accessed on: https://www.esma.europa.eu/sites/default/files/library/esma35-43-2134_technical_advice_to_the_ec_on_product_intervention.pdf
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