09 April 2002

CESR: A European Regime of Investor Protection - The Harmonisation of Conduct of Business Rules

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The ISD establishes some basic conduct of business requirements for EU investment firms. The present diversity of conduct of business regimes may hinder not only the freedom which investment firms have to provide services throughout Europe, but also the provision of an adequate level of protection to European investors. It is therefore necessary to undertake a process of convergence in this field, both to ensure a level playing field for investment firms and to foster public confidence in the operation of the single market in financial services.

This work is to provide investors, investment services providers and EEA regulators, with a clear and concise statement of the Standards and Rules on conduct of business that CESR members expect investment firms to meet.

The main body of the paper is composed of several chapters. Each chapter contains Standards followed by more or less detailed Rules. The Standards are intended to be the key parameters for a harmonised conduct of business regime. The Rules implement the Standards, clarifying their scope and practical meaning. Both Standards and Rules are intended to be mandatory.

This set of Standards and Rules provides harmonised core conduct of business rules for retail investors in the following areas:

Standards and Rules of general application,

information to be provided to customers,

the 'know your customer' standards and the duty of care,

customers agreements,

dealing requirements (including the 'best execution' standards) and

individual discretionary portfolio management.

CESR members will seek to implement the Standards and Rules set out in this paper in their regulatory objectives and, when possible, in their respective rules.

The profesional and counterparty regime, including the categorisation of investors paper, requires further work by CESR.

See full CESR paper.

© CESR - Committee of European Securities Regulators