ZKA: Response to CESR’s Call for Opinions on Technical Advice on MiFID

18 February 2005

The German Zentraler Kreditausschuss (ZKA) issued its response to CESR’s Call for Opinions on the Draft Technical Advice on Possible Implementing Measures of the Directive on Markets in Financial Instruments. ZKA supports CESRs’ view that professional clients need less protection than retail clients. According to ZKA, professional clients are usually entities which possess much more investment experience, knowledge and expertise than retail clients. They also have an interest in being able to react flexibly and in not being prevented from doing so by rigid rules. Any over-regulation would lead to more bureaucracy and thus make business with professional clients more expensive, while failing to take due account of the professionalism and needs these market participants have.

The ZKA favours the first of the options under consideration by CESR, stating that no advice on level 2 measures should be provided. Instead, how agreements are entered into and what they contain should be left explicitly to market participants. Retention of this tried and tested practice in the future would also have the advantage that existing agreements would not need to be modified.

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