ESMA warns firms amid 'surge in trading by retail clients'
Pan-European regulator ESMA has warned investment firms they face "even greater duties" as waves of retail investors have flooded into the market since the start of the year at a time of heightened uncertainty.
ESMA wrote in a letter to regulated investment firms published on Wednesday (6 May) that "several" country-level European regulators had reported a "significant increase in the number of investment accounts opened by retail clients and a surge in trading by retail clients", who now face heightened risk "under these highly uncertain and unprecedented market circumstances."
The regulator warned that "firms have even greater duties", particularly with regard to less sophisticated investors "who decide to invest during these times of intensified market volatility."
ESMA said: "Firms… [have an] obligation to act honestly, fairly and professionally in accordance with the best interests of their clients when providing investment or ancillary services and to comply with all relevant MiFID II conduct of business and related organisational requirements.
"In particular, ESMA points to the product governance, information disclosure, suitability and appropriateness requirements."
Reiterating firm's responsibilities under MiFID II, ESMA said alongside national regulators such as the Financial Conduct Authority it would "monitor retail clients' involvement in the financial markets and firms' compliance with their conduct of business obligations and related organisational requirements."
by Tanya at http://www.ifacareers.today
Daniel van Niekerk
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