Table of Contents
Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics (ESMA35-43-349) (updated 15 December 2023)Acronyms and definitions usedTable of questionsIntroduction1 Best execution [Last update: 3 October 2019]Question 1 "Reasonable steps" Vs "sufficient steps" [Last update: 10 October 2016]Question 2 Checking fairness of prices when executing orders or decisions in OTC products [Last update: 10 October 2016]Question 3 Use of a single venue [Last update: 16 December 2016]Question 4 Accessibility of reports [Last update: 16 December 2016]Question 5 Latest date for publication of reports [Last update: 16 December 2016]Question 6 MiFID II and timing of publication of reports [Last update: 4 April 2017]Question 7 Reports for services of order execution and reception and transmission of orders [Last update: 16 December 2016]Question 8 Disclosure of reports to public [Last update: 3 October 2019]Question 9 Venue disclosure of costs [Last update: 16 December 2016]Question 10 Summary of the analysis and conclusions from a firm's execution monitoring [Last update: 16 December 2016]Question 11 Information to be published on entities within a group [Last update: 4 April 2017]Question 12 Transactions with eligible counterparties and RTS 27 [Last update: 4 April 2017]Question 13 Execution policies for investment firms or market operators operating OTFs [Last update: 4 April 2017]Question 14 Information on passive and aggressive orders in the context of portfolio management and RTO [Last update: 4 April 2017]Question 15 Securities Financing Transactions (SFTs) [Last update: 10 July 2017]Question 16 Application of best execution to OTF operators [Last update: 3 October 2017]Question 17 Disclosure of quality of execution when using direct electronic access [Last update: 3 October 2017]Question 18 Definition of 'other liquidity provider' [Last update: 25 May 2018]Question 19 Reporting for firms using a venue's RFQ system to agree a trade [Last update: 3 October 2018]Question 20 RTS 27 reporting requirements for market makers and other liquidity provider [Last update: 28 March 2019]Question 21 Reporting for venues on the 'trading mode' according to RTS 27 [Last update: 29 May 2019]Question 22 Reporting for venues and firms on template fields of RTS 27 and 28 if the required content is notapplicable to their activities [Last update: 29 May 2019]Question 23 Reporting on 'passive' and 'aggressive' orders for firms using quote-driven systems to have client orders executed [Last update: 29 May 2019]Question 24 RTS 28 reporting and third-country execution venues [Last update: 29 May 2019]Question 25 Classification of financial instruments under RTS 27 if ESMA has not published any calibrated market sizes [Last update: 11 July 2019]2 Suitability and appropriateness [Last update: 28 March 2019]Question 1 Suitability report: advice leading or not to a transaction [Last update: 10 October 2016]Question 2 Suitability report: record of when the advice is given [Last update: 10 October 2016]Question 3 Suitability report: availability on firm's website [Last update: 28 March 2019]Question 4 Suitability report: provision to the client together with the report due when carrying out an order on behalf of a client other than for portfolio management [Last update: 10 October 2016]Question 5 Suitability report: advice not to buy or sell a financial instrument [Last update: 10 October 2016]Question 6 Transactions on unsuitable products [Last update: 10 October 2016]Question 7 Disclosure of information by the client on his/her financial situation [Last update: 10 October 2016]Question 8 Record keeping obligations related to investment advice [Last update: 16 December 2016]Question 9 Periodic reporting of how the investment meets the client's preferences, objectives and other characteristics of the retail client [Last update: 18 December 2017]Question 10 Suitability report: Use of generic statements [Last update: 28 March 2019]3 Recording of telephone conversations and electronic communications [Last update: 3 October 2017]Question 1 Recording of internal telephone conversations and electronic communications [Last update: 10 October 2016]Question 2 Charging clients for access to recordings [Last update: 10 October 2016]Question 3 Monitoring of records [Last update: 10 October 2016]Question 4 Period of record keeping [Last update: 10 October 2016]Question 5 Types of electronic communications in scope of the requirements [Last update: 10 October 2016]Question 6 Monitoring of records: control function [Last update: 10 October 2016]Question 7 Recording of telephone conversations and electronic communications: critical or important operational function [Last update: 10 October 2016]Question 8 Recording of telephone conversations and electronic communications from start to end [Last update: 10 October 2016]Question 9 Client access to relevant internal conversations [Last update: 10 October 2016]Question 10 Use of mobile devices [Last update: 10 October 2016]Question 11 Telephone conversations and electronic communications that should be recorded [Last update: 10 October 2016]Question 12 Scope of activities covered by the requirements in Article 16(7) of MiFID II [Last update: 10 July 2017]Question 13 Scope of activities covered by the requirements in Article 16(7) of MiFID II (2) [Last update: 3 October 2017]4 Record keeping [Last update: 10 November 2017]Question 1 Encryption [Last update: 10 October 2016]Question 2 Securities financing transactions (SFTs) [Last update: 10 November 2017]5 Investment advice on an independent basis [Last update: 3 October 2018]Question 1 Assessment and comparison of a sufficient range of financial instruments [Last update: 10 October 2016]Question 2 'Look - through' approach [Last update: 3 October 2018]6 Underwriting and placing [Last update: 16 December 2016]Question 1 Various funding alternatives [Last update: 10 October 2016]Question 2 Information on investor clients to be provided to issuer clients [Last update: 16 December 2016]Question 3 Record Keeping [Last update: 16 December 2016]Question 4 Obligations relating to advice on corporate finance strategy [Last update: 16 December 2016]7 Inducements (research) [Last update: 12 July 2018]Question 1 Use of a Research Payment Account for more than one client's portfolio or account [Last update: 10 October 2016]Question 2 Status of client money held in a Research Payment Account [Last update: 16 December 2016]Question 3 Unrequested research provided "free of charge" [Last update: 16 December 2016]Question 4 Research from third-country providers [Last update: 16 December 2016]Question 5 Research from another group entity [Last update: 16 December 2016]Question 6 Minor non-monetary benefit vs. research [Last update: 16 December 2016]Question 7 "Corporate access" [Last update: 4 April 2017]Question 8 Macro-economic analysis [Last update: 23 March 2018]Question 9 Research related to fixed-income, currencies or commodities [Last update: 23 March 2018]Question 10 Budgeting, allocation of the research budget, determination and assessment of payments made from it [Last update: 4 April 2017]Question 11 Disclosure of client research charges [Last update: 4 April 2017]Question 12 Free trial periods [Last update: 12 July 2018]8 Post-sale reporting [Last update: 23 March 2018]Question 1 Reporting on the depreciation of the overall value of a client's portfolio [Last update: 16 December 2016]Question 2 Cash withdrawals by the client [Last update: 16 December 2016]Question 3 Reporting on the depreciation of leveraged financial instruments or contingent liability transactions [Last update: 16 December 2016]Question 4 Reporting on portfolio depreciation in case of client additions to the portfolio [Last update: 6 June 2017]Question 5 Reporting on the depreciation of financial instruments with no secondary market or daily price reference [Last update: 6 June 2017]Question 6 Value and commencement of reporting requirement [Last update: 6 June 2017]Question 7 Reporting on the depreciation: choice of value for the threshold calculation [Last update: 6 June 2017]Question 8 Flexibility allowed by client agreement (1) [Last update: 3 October 2017]Question 9 Flexibility allowed by client agreement (2) [Last update: 3 October 2017]Question 10 Reporting to retail and professional clients [Last update: 10 November 2017]Question 11 Holding a retail client account [Last update: 23 March 2018]Question 12 Reporting on the depreciation: exceeding same threshold during a reporting period [Last update: 23 March 2018]9 Information on costs and charges [Last update: 15 December 2023]Question 1 Ex-post disclosure of total costs and charges [Last update: 16 December 2016]Question 2 Illustration of the cumulative effect of costs on return [Last update: 16 December 2016]Question 3 Ex-post disclosure of the cumulative effect of costs on return [Last update: 16 December 2016]Question 4 Periodicity of ex-post information on total costs and charges [Last update: 16 December 2016]Question 5 Voluntary periodical ex-post information on total costs and charges [Last update: 16 December 2016]Question 6 Cost components of products and PRIIPs calculation methodology [Last update: 6 June 2017]Question 7 Use of products' costs presented in the PRIIPs KID [Last update: 28 March 2019]Question 8 PRIIPs calculation methodology for instruments outside the scope of PRIIPs [Last update: 6 June 2017]Question 9 Cost calculation: access to relevant data [Last update: 6 June 2017]Question 10 Cost of products falling within the PRIIPs transition period [Last update: 6 June 2017]Question 11 Unavailability of manufacturer data on costs [Last update: 6 June 2017]Question 12 Cost of transactions initiated in the provision of an investment service [Last update: 6 June 2017]Question 13 Aggregation of costs and charges [Last update: 15 December 2023]Question 14 Ex-ante disclosure and unavailability of actually incurred costs [Last update: 6 June 2017]Question 15 Calculation of ex-ante transaction costs [Last update: 3 October 2017]Question 16 Price of the position of the investment firm [Last update: 3 October 2017]Question 17 Identification and disclosure of mark-ups and structuring costs [Last update: 3 October 2017]Question 18 Eligible counterparties not intending to offer financial instruments to clients [Last update: 3 October 2017]Question 19 Specific limitations to cost disclosure for eligible counterparties and professional clients [Last update: 3 October 2017]Question 20 Disclosure in case of zero costs and charges [Last update: 3 October 2017]Question 21 Timing of first annual ex-post reports on costs and charges [Last update: 3 October 2017]Question 22 Level of individualisation of ex-ante information [Last update: 28 March 2019]Question 23 Conditions to be met to use costs grids/tables for ex-ante information [Last update: 28 March 2019]Question 24 Ex-ante information for the service of portfolio management [Last update: 28 March 2019]Question 25 Terminology [Last update: 28 March 2019]Question 26 Taxes to be included in the ex-ante and ex-post costs and charges information [Last update: 28 March 2019]Question 27 Ex-ante information in case ofsell orders [Last update: 29 May 2019]Question 28 Ex-ante information in case of telephone trading [Last update: 29 May 2019]Question 29 Use of assumed investment amounts for ex-ante information in relation to investment services and/or products with non-linear charging structures [Last update: 29 May 2019]Question 30 Use of ranges and maximum amount/percentages for ex-ante information [Last update: 29 May 2019]Question 31 Information on costs and charges: Ex-post information for the service of portfolio management [Last update: 4 December 2019]Question 32 Ex-post information under Article 50(9) of the Delegated Regulation and its relationship with information under Article 60 of the Delegated Regulation [Last update: 4 December 2019]Question 33 Fair, clear and not misleading presentation of costs and charges [Last update: 21 December 2020]Question 34 Timing ex-ante information investment advice and RTO/execution services relating to same transaction(s)s [Last update: 28 May 2021]Question 35 Foreign currency [Last update: 15 December 2023]10 Appropriateness/Complex Financial Instruments [Last update: 6 June 2017]Question 1 Financial instruments complex per se: non-UCITS collective investment undertakings [Last update: 6 June 2017]11 Client categorisation [Last update: 25 May 2018]Question 1 Information to clients on categorisation [Last update: 3 October 2017]Question 2 Clients who may be treated as professionals on request (1) [Last update: 25 May 2018]Question 3 Clients who may be treated as professionals on request (2) [Last update: 25 May 2018] Question 4 Clients who may be treated as professionals on request (3) [Last update: 25 May 2018]Question 5 Clients who may be treated as professionals on request (4) [Last update: 25 May 2018]Question 6 Clients who may be treated as professionals on request (5) [Last update: 25 May 2018]12 Inducements [Last update: 29 March 2021]Question 1 Payments made to a third party in relation to the provision of independent advice of portfolio management [Last update: 10 November 2017]Question 2 Status of client money [Last update: 10 November 2017]Question 3 Performance of the function of investment management or portfolio management of one or more investment funds for a UCITS management company or an AIF Manager [Last update: 18 December 2017]Question 4 Performance of marketing functionfor a UCITS management company or an AIF Manager [Last update: 18 December 2017]Question 5 Performance of administration function for a UCITS management company or an AIF Manager [Last update: 18 December 2017]Question 6 Application of inducements rules to financial instruments in which the firm has invested on behalf of the client before 3 January 2018 [Last update: 23 March 2018]Question 7 Minor non-monetary benefits [Last update: 28 May 2020]Question 8 Quality enhancement [Last update: 29 March 2021]13 Provision of investment services and activities by third country firms [Last update: 28 March 2019]Question 1 Reverse solicitation (1) [Last update: 25 May 2018]Question 2 Reverse solicitation (2) [Last update: 25 May 2018]Question 3 Reverse solicitation (3) [Last update: 12 July 2018]Question 4 Reverse solicitation (4) [Last update: 28 March 2019]14 Application of MiFID II after 3 January 2018, including issues of ‘late transposition [Last update: 18 December 2017]Question 1 Authorisations granted before 3 January 2018 [Last update: 18 December 2017]Question 2 Passport notifications made before 3 January 2018 [Last update: 18 December 2017]Question 3 Late transposition and passporting of investment services (1) [Last update: 18 December 2017]Question 4 Late transposition and passporting of investment services (2) [Last update: 18 December 2017]Question 5 Late transposition and passporting of investment services (3) [Last update: 18 December 2017]15 Other issues [Last update: 3 October 2019]Question 1 Understanding of the term "ongoing relationship" [Last update: 3 October 2019]Question 2 Provision of investment services by UCITS management companies or alternative investment fund managers through branches in host Member States [Last update: 25 May 2018]Question 3 Durable medium [Last update: 28 March 2019]16 Product governance [Last update: 19 November 2021]Question 1 Target market of CoCo-bond funds [Last update: 28 March 2019]Question 2 Assessment of products' costs and charges (1) [Last updated 6 November 2020]Question 3 Assessment of products' costs and charges (2) [Last updated 6 November 2020]Question 4 Assessment of products' costs and charges (3) [Last updated 6 November 2020]Question 5 Bonds embedding a make-whole clause [Last updated 19 November 2021]17 Product intervention [Last update: 4 December 2019]Question 1 Cross-border provision of services [Last update: 4 December 2019]18 MiFID practices for firms selling financial instruments subject to the BRRD resolution regime [Last update: 18 February 2020]Question 1 Sales of subordinated eligible liabilities and the assessment of suitability [Last update: 18 February 2020]Question 2 Active offering [Last update: 18 February 2020]Question 3 Information to be collected from clients [Last update: 18 February 2020]Question 4 Calculation of concentration [Last update: 18 February 2020]Question 5 Client initiative [Last update: 18 February 2020]Question 6 Monitoring of 10% threshold [Last update: 18 February 2020]
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Version date: 10 October 2016 - onwards
Question 5 Suitability report: advice not to buy or sell a financial instrument [Last update: 10 October 2016]
Shall a suitability report be provided to the client when the advice given is not to buy or sell a financial instrument?
Answer 5
Yes. Firms providing investment advice are required to always provide the client with a suitability report, irrespective of the specific recommendation given, including the advice not to buy, hold or sell a financial instrument.
In this regard, Recital 87 of the MiFID II Delegated Regulation specifically clarifies that "investment firms should undertake a suitability assessment not only in relation to [when] recommendations to buy a financial instrument are made but for all decisions whether to trade including whether or not to buy, hold or sell an investment".