21 October 2020

POLITICO: Maijoor warns MiFID rollback threatens investor protection

Europe’s top securities regulator hit out at plans to roll back EU financial markets rules in the name of economic recovery.

Steven Maijoor, chair of the European Securities and Markets Authority, said today that some of the proposed amendments to the second Markets in Financial Instruments Directive (MiFID II) risked undermining protections for ordinary savers.

He took aim at plans to let brokers “bundle” research in with other trading services — revising a plank of MiFID II that bars such “inducements” to avoid conflicts of interest.

Maijoor also cast doubt on the idea of creating a new category of clients — sophisticated retail savers, who would get lighter protections than ordinary savers, but still some restrictions compared to professionals. He called it unnecessary and complicated.

Critics of the existing requirement for unbundling claim it’s led to a drought in research on small companies. Maijor said ESMA research showed that coverage remains stable for those firms.

He said waiving the rule for companies with a market capitalization up to €1 billion, as proposed by the European Commission, would remove 75 percent of EU firms.

Unbundling rules have brought “significant investor protection benefits” such as transparency and accountability on research spending and execution services, he told an Irish Funds conference.

“Is it worth throwing these benefits away?” he asked.

His comments come as the Council signed off on its version of the bill, setting it up for final-stage negotiations with the Parliament, where party leaders are negotiating on amendments that could relax the rules even further.

© POLITICO