EAPB position on Inducements under MiFID

14 February 2007

EAPB issued its response on CESR’s consultation paper on Inducements under MiFID. EAPB notes that for an inducement to be permitted, CESR requires a direct link between an individual inducement and the enhancement of the quality of a specific investment service to the client. Such a requirement would go beyond the provisions laid down in Art 26 MiFID Level 2 Directive.

From the wording of this provision it follows, that inducements only have to be generally qualified to improve an investment firm’s service. Irrespective of the afore-mentioned, an individual verification with regard to the improvement of the service quality as suggested by CESR would practically not be feasible.

EAPB also complains that CESR seems to introduce a third requirement. According to CESR an inducement to be permitted has to be proportionate to the benefit receivable by the client. “We cannot derive such a criterion from any provisions set out in the MiFID Level 1 or Level 2 Directive”, EAPB notes. “Such an interpretation lacks any legal basis.”

Full response

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