1. MiFIR rules on product intervention The role of ESMA
ESMA REGULAR USE
26 September 2017 | Brussels
MiFIR rules on product intervention The role of ESMA
Salvatore Gnoni – Investor Protection and Intermediaries

2. MiFID II/MiFIR - Investor protection
The investor protection regulatory framework covers all phases of the product/service cycle.
Manufacturing of the “product”
Marketing and distribution of products/provision of services
Post-sale
Product governance
Inducements
Independent advice
Suitability/appropriateness
Information to clients
Organisational requirements for investment firms
Best execution
(Article 3 exemptions)
Reporting on costs and charges
Complaints- handling
On-going advice
Powers to national supervisors and ESMA

3. Product intervention - The broad picture
Power to prohibit or restrict (a) the marketing, distribution or sale of certain financial instruments [and structured deposits] or financial instruments with certain features or (b) certain financial activities or practices
MiFIR product intervention powers are granted to National Competent Authorities and to ESMA or, for structured deposits, to EBA
Possibility to intervene on a precautionary basis before a financial instrument has been marketed, distributed or sold to clients.
Product intervention powers in the PRIIPS Regulation – The role of EIOPA
Relevant provisions
(Article 9 of ESMA Regulation)
Recital (29) and Articles 39 to 43 of MiFIR (Regulation 600/2014/EU)
Articles 19 and 21 of MiFIR Commission Delegated Regulation 567/2017

4. The conditions for the use of product intervention powers
Main conditions for intervention [ESMA]:
the existence of a significant investor protection concern, a threat to the orderly functioning and integrity of financial markets or commodity markets, or a threat to the stability of the whole or part of the financial system in the EU;
Applicable EU regulatory requirements do not address the threat; and
NCAs have not taken action to address the threat or the actions they have taken do not adequately address the threat
Any intervention should consider:
Proportionality
risks of regulatory arbitrage

5. Main difference between NCAs and ESMA measures
ESMA’s measures are temporary and need to be renewed.
Measures adopted by ESMA under Article 40 of MiFIR are temporary and cannot exceed 3 months. At the end of the 3 months, ESMA may renew a measure.
NCAs’ measures can be permanent or temporary.

6. National measures – ESMA coordination role
ESMA to assess whether action taken by NCAs is justified and proportionate and that, where appropriate, a consistent approach is taken by NCAs
ESMA to receive notification of national measures and to adopt an opinion on whether prohibitions or restrictions are justified and proportionate
NCAs to explain publicly reasons for not following ESMA opinion

7. ESMA - Strengthening market monitoring and on-going work
Product intervention powers allow NCAs and ESMA to take specific action on issues of significant importance.
To be able to wisely use these powers, both NCAs and ESMA need to monitor financial markets to identify concerns to investor protection or the orderly functioning and integrity of financial markets.
The task of monitoring the quite heterogeneous financial market across Member States and multiple asset classes is complex. Both ESMA and NCAs continue developing appropriate market monitoring.
June ESMA statement on preparatory work in relation to CFDs, binary options and other speculative products.

8. Thanks