ESMA says EU regulators show improvement in MiFID execution

ESMA says EU regulators show improvement in MiFID execution

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European financial regulators’ supervision of execution requirements under the Markets in Financial Instruments Directive (MiFID), the European Securities and Markets Authority (ESMA) said in its latest report on the matter. The regulatory bodies are giving greater attention to best execution requirements under the MiFID and have successfully taken steps to address shortcommings addressed in last year’s review.

“In its report, ESMA finds there are clear improvements in the level of attention paid to the supervision of best execution requirements and that in general, regulators are adopting a more pro-active supervisory approach to monitoring compliance,” the ESMA said in a press release accompanying the report.

The assessment of regulators’ supervisory convergence was based on peer reviews.

In 2015, the ESMA report on peer review report found that the best execution provisions and convergence levels in the general supervisory practices by national regulators was relatively low. In fact, 15 out of 29 countries were found not applying or partly applying essential criteria for ensuring MiFID convergence. The latest report covers the relevant regulatory bodies of these15 that did show needed to take a closer look at their supervision practices. These were Bulgaria, Cyprus, Denmark, Estonia, Greece, Hungary, Liechtenstein, Lithuania, Latvia, Malta, Poland, Romania, Sweden, Slovenia, and Slovakia.

“Information gathered [in 2016] shows clear improvements in the level of attention that [National Competent Authorities] NCAs pay to the supervision of best execution requirements. In general, a more proactive supervisory approach is applied to monitoring compliance with best execution requirements and best execution appears to have been given higher prioritisation as a conduct of business supervisory issue,” the ESMA said in the report.

Following is an overview of the number of deficiencies identified in the 2015 peer review and the number of deficiencies that still remain to be addressed, as defined by the ESMA:

ESMA deficiencies report

ESMA’s latest report indicated that the regulators of five countries – Cyprus, Hungary, Lithuania, Malta, and Poland, have taken specific actions that addressed deficiancis, while the regulators of the remaining 10 countries still have to face some of the identified deficiencies.

The EU regulator provided a summary on the activities and deficiencies and progress of every country.You can review the full ESMA report on this link.

The ESMA is an independent EU authority that directly supervises and safeguards the EU financial markets. It has established a single rulebook for EU financial markets and promotes the convergence of the regulatory bodies of EU countries. In addition, it also assesses risks to investors, markets and financial stability.

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