20110000 - ESMA - europa.eu

|22 May 2014 |

|Reply form for the |
|ESMA MiFID II/MiFIR Discussion Paper |
| |
|Template for comments |
|for the ESMA MiFID II/MiFIR Discussion Paper |
| |
|Date: 22 May 2014|



Responding to this paper


The European Securities and Markets Authority (ESMA) invites responses to
the specific questions listed in the ESMA MiFID II/MiFIR Discussion Paper,
published on the ESMA website (here).





Instructions


Please note that, in order to facilitate the analysis of the large number
of responses expected, you are requested to use this file to send your
response to ESMA so as to allow us to process it properly. Therefore,
please follow the instructions described below:


i. use this form and send your responses in Word format;


ii. do not remove the tags of type - i.e. the response
to one question has to be framed by the 2 tags corresponding to the
question; and


iii. if you do not have a response to a question, do not delete it and
leave the text "TYPE YOUR TEXT HERE" between the tags.


Responses are most helpful:


. if they respond to the question stated;


. contain a clear rationale, including on any related costs and benefits;
and


. describe any alternatives that ESMA should consider


Given the breadth of issues covered, ESMA expects and encourages
respondents to specially answer those questions relevant to their
business, interest and experience.


To help you navigate this document more easily, bookmarks are available
in "Navigation Pane" for Word 2010 and in "Document Map" for Word 2007.


Responses must reach us by 1 August 2014.


All contributions should be submitted online at www.esma.europa.eu under
the heading 'Your input/Consultations'.





Publication of responses


All contributions received will be published following the end of the
consultation period, unless otherwise requested. Please clearly indicate by
ticking the appropriate checkbox in the website submission form if you do
not wish your contribution to be publicly disclosed. A standard
confidentiality statement in an email message will not be treated as a
request for non-disclosure. Note also that a confidential response may be
requested from us in accordance with ESMA's rules on access to documents.
We may consult you if we receive such a request. Any decision we make is
reviewable by ESMA's Board of Appeal and the European Ombudsman.





Data protection


Information on data protection can be found at www.esma.europa.eu under the
heading 'Disclaimer'.







1. Overview


2. Investor protection



Authorisation of investment firms



Do you agree that the existing work/standards set out in points 2 and 3
above provide a valid basis on which to develop implementing measures in
respect of the authorisation of investment firms?




AFME Response


In principle, we agree with ESMA that the implementing measures should be
based on the existing standards. However, we would urge ESMA to use the
opportunity to rationalise and streamline the information requirements
wherever possible to ensure that regulators receive the information they
really need and firms are not unduly burdened with onerous information
requirements. This will result in smoother and speedier flows of
information between both firms and competent authorities and allow firms to
provide cross border services more quickly, which will ultimately benefit
clients.



What areas of these existing standards do you consider require adjustment,
and in what way should they be adjusted?




AFME Response


See our comments to Question 1.



Do you consider that the list of information set out in point 6 should be
provided to Home State NCAs? If not, what other information should ESMA
consider?




AFME Response


The information appears broadly relevant (but see our comments in Q1);
however, we note that the information requirements regarding the management
body are very detailed and may on occasions be difficult to establish in
all instances, e.g. management may have not kept detailed records of the
precise number of employees reporting into them over the last ten years. A
five-year period may be more appropriate. The information requirements e.g.
regarding the financial and non-financial interests of close associates of
members of the management body including children or parents are very
intrusive and may pose questions over data privacy issues in certain
jurisdictions.


With respect to point 6(f) under "Information on the capital", rather than
requiring evidence that "no money laundering or terrorist financing is
attempted" it would be more effective to express this requirement in terms
of controlling and managing the risk that the relevant firm will be used by
others for money laundering or terrorist financing. In addition, further
clarity is required with respect to the types of documentary support
required to ensure that the anti-money laundering risk is reduced.


With respect to "Information on the organisation", the requirement to
provide a programme of initial operations for the next three is potentially
challenging and we believe a shorter period would be more appropriate. For
example, the UK Financial Conduct Authority forms have focused on the
initial twelve months, whilst three years is more consistent with
requirements on existing firms being acquired.


Alternatively, the requirement could be amended such that the programme of
initial operations for the next three years would only be required so far
as the firm has developed such plans, but, at a minimum, a programme for
the first twelve months would be required.


Furthermore, a start-up likely would find it difficult to provide a
definitive and detailed programme for its regulated and unregulated
activities. In addition, point 9(iii) also requires significant amounts of
information about the identity of planned marketers, financial advisors
etc. This requirement should be adjusted by referring to the identity and
address details of the marketers etc. or, if not yet identified, the
expected geographical localisation of proposed appointees.



Are there any other elements which may help to assess whether the main
activities of an applicant investment firm is not in the territory where
the application is made?




AFME Response


Yes. The "elements" identified for helping to assess, whether the main
activities of the applicant investment firm are not in the territory where
the application is made, are already very comprehensive. However, we would
suggest that the relevant information provided under the programme of
operations (referred to in MiFID 2 Article 7(2)), may, at the option of the
applicant investment firm, also include a description of its rationale in
having opted for the particular regulatory system of a member state.
Members believe that this will give the firm an opportunity to explain its
objectives rather than setting forth facts concerning its activities which
could be misinterpreted without further explanation.


Furthermore, MiFIR Article 46.7 states "ESMA shall develop draft regulatory
technical standards to specify the information that the applicant third-
country firm shall provide to ESMA in its application for registration in
accordance with paragraph 4 and the format of information to be provided in
accordance with paragraph 5". However, neither the Consultation Paper nor
the Discussion Paper makes any reference to these draft RTS. We would be
grateful if ESMA could confirm when these RTS will be issued for
consultation although we understand this is likely to be in the Q4
Consultation Paper.



How much would one-off costs incurred during the authorisation process
increase, compared to current practices, in order to meet the requirements
suggested in this section?




AFME Response


As a trade association, AFME is not placed to comment on this question.



Are there any particular items of information suggested above that would
take significant time or cost to produce and if so, do you have alternative
suggestions that would reduce the time/cost for firms yet provide the same
assurance to NCAs?




AFME Response


See our answers above.




Freedom to provide investment services and activities / Establishment of a
branch



Do you agree that development of technical standards required under
Articles 34 and 35 of MiFID II should be based on the existing standards
and forms contained in the CESR Protocol on MiFID Notifications (CESR/07-
317c)? If not, what are the specific areas in the existing CESR standards
requiring review and adjustment?




AFME Response


Yes, we agree that the requirements should be based on existing standards
as far as possible. However, it will be important to ensure that the new
RTS content which is based on historical standards and protocols is amended
to reflect MiFID 2 including e.g. the possibility that member states may
require third country firms to establish branches when providing services
for retail clients or elective professionals.


Given the number of provisions in MiFID/MiFIR