ESMA tells EU brokers to crack down on sales practices to retail investors


ESMA particularly notes selling practices of complex financial products to retail clients.

ESMA is continuing to throw its weight around, and establish itself as a to-be-taken-seriously pan-European rule setter in financial markets.

What exactly is ESMA’s role? While not technically a regulator — each EU country has its own financial regulator (e.g. FCA in the UK, BaFIN in Germany, CySEC in Cyprus…) — ESMA’s self stated mission is to build a single rule book for EU financial markets and ensure its consistent application across the EU.

With ESMA’s major trade-reporting EMIR regulations about to take effect next week, it is not resting on its laurels and is letting individual country regulators (and regulated brokers) know that it is looking to raise standards in other areas too — with the most recent one being a focus on sales practices.

ESMA’s latest missive states that firms’ compliance with MiFID selling practices ‘may have fallen short of expected standards’, particularly when it comes to selling complex products to retail investors. ESMA wants to raise awareness about the risks arising from investing in types of complex products which were previously unavailable to retail investors.

To see the ESMA release on sales practices click here (pdf).

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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ESMA tells EU brokers to crack down on sales practices to retail investors

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