{"id":541,"date":"2018-01-31T12:51:16","date_gmt":"2018-01-31T12:51:16","guid":{"rendered":"http:\/\/eulawenforcement.com\/?p=541"},"modified":"2019-03-15T13:52:31","modified_gmt":"2019-03-15T13:52:31","slug":"mifir-intervention-powers-strengthen-customer-protection","status":"publish","type":"post","link":"https:\/\/eulawenforcement.com\/?p=541","title":{"rendered":"MiFIR: Intervention Powers strengthen customer protection"},"content":{"rendered":"

The Markets in Financial Instruments Regulation N\u00ba600\/2014 (MiFIR)<\/a> that entered into force on the 3rd of January 2018 establishes intervention powers for National Competent Authorities (NCAs), the European Banking Authority (EBA<\/a>) and the European Securities and Markets Authority (ESMA<\/a>). This post discusses these \u2018MiFIR\u2019 developments. Other key developments in this area are the Packaged Retail and Insurance-Based Investment Products Regulation (PRIIPs<\/a>), which introduces product intervention powers for National Competent Authorities, and the European Insurance and Occupational Pensions Authority (EIOPA<\/a>).<\/span><\/p>\n

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MiFIR intervention powers may affect not only the marketing, distribution or sale of certain financial instruments, but financial activity or practice as well. The restrictions will apply in the circumstances specified by the EU or the national authority. Products that can be affected are financial instruments according to MiFID (i.e. shares, derivatives, bonds, UCITS funds, alternative investment funds, etc.) and the entities, those firms authorized under Directive 2014\/65\/EU (MiFID) <\/a>or under the Directive 2013\/36\/EU (CRD)<\/a>, such as banks.
\nThis new framework of intervention powers in the EU will for the first time allow globally coordinated actions. If these powers are well applied, they will favor market confidence and they might be an important resource to face more relevant investor protection threats and support financial stability.<\/span><\/p>\n

In light of this new development, three key aspects are to be considered:<\/span><\/p>\n

1. ESMA & EBA getting new temporary intervention powers<\/strong><\/p>\n

Intervention powers imply a very wide range of possible actions, such as that ESMA might prohibit the distribution of a specific product, restrict its marketing to a specific target market or accept it only if some measures are taken (i.e. standard risk warning). By way of illustration, ESMA is considering intervention measures in relation to the provision of contracts for differences (CFDs), including rolling spot forex and binary options to retail investors. In December 2017, ESMA released a Statement<\/a> and in January 2018 has published a call for evidence<\/a> on potential measures. <\/span><\/p>\n

Formerly, none of these type of intervention powers existed at EU level and therefore if action was not taken by National Competent Authorities there was no further resource to be activated. Moreover, different actions in relation to the same product or service were possible due to non-aligned approaches. Therefore the temporary powers bestowed upon ESMA and EBA by MiFIR allow for a more consistent application of intervention powers. Now, when a measure like this is adopted, it applies across Member States and to all market participants providing services in Europe. Furthermore, these intervention actions prevail over the previous ones taken by national competent authorities. <\/span><\/p>\n

We should always keep in mind that<\/a> \u201can EU product intervention should be a measure of last resort, when other investor protection measures fail to produce the desired effect. MiFID II introduces important new investor protection measures, including product governance measures, which should reduce the need for product intervention measures.\u201d Action can be taken by authorities only if: <\/span><\/p>\n