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Speech delivered at the CNMV Conference - La Nueva Financiera Regulacion, Madrid
"The three European Supervisory Authorities (ESAs) – the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) – work on improving consumer protection by contributing to a higher degree of regulatory and supervisory convergence across EU financial markets and securing cross-border coordination. We do this primarily by enhancing investor protection when creating the single rulebook for EU financial markets, but also by more direct measures such as issuing EU-wide investor warnings.
Indeed, ESMA plays a key role in the completion of EU financial markets legislation developed by the European Commission, the European Parliament and the Council of the European Union. Two legislative acts are currently high on our agenda in this respect – and I guess also high on the agenda of many people in the audience here today – that I must speak about them: PRIIPs and the MiFID review.
Developing technical standards and providing the European Commission with advice is not the only work we do on investor protection. As already indicated ESMA has warned investors at different occasions over the last few years and asked national authorities to intervene accordingly. For example, we have issued warnings on topics like the sale of complex products, on contracts for differences and investing on the internet. More recently, and I definitely wanted to touch upon this today after being made aware of some practices in Spain, we have warned about the so called self-placement practices where financial institutions sell their own clients the financial instruments they have issued to comply with stricter prudential requirements.
The loss bearing features of many of these products mean that consumers are exposed to significant risks that do not exist for other financial instruments. For example, investors are more likely to be subject to bail-in and the absence of harmonised structures, trigger points and loss absorption makes it difficult for investors to understand and compare the products. Each product needs to be assessed as a unique offering, which may be particularly challenging for retail investors."