Ireland: Investment Firms Quarterly Legal And Regulatory Update 1 April 2016 To 30 June 2016

Last Updated: 20 July 2016
Article by Dillon Eustace

Most Read Contributor in Ireland, July 2017


Markets in Financial Instruments Directive ("MiFID")

(i) ESMA peer review report on MiFID suitability requirements

On 7 April 2016, the European Securities and Markets Authority ("ESMA") published a summary of the key findings of its recent peer review regarding compliance with the MiFID suitability requirements (the "Report").

The peer review took the form of a self-assessment questionnaire for all Competent Authorities ("CAs"). CAs had 1 year to complete the review, with the review period running from 1 January 2013 to 31 December 2014.

The purpose of the questionnaire was to capture the possible different ways CAs determine when investment advice is provided and how they consistently supervise and enforce the relevant suitability requirements. The Annex to the report provides a detailed summary of all replies received from the various CAs.

Overall, ESMA found that while most CAs have a good understanding of the investment advice market in their jurisdictions and regularly review the distribution methods and business models of investment firms, there is scope to adopt more proactive supervisory approaches and strengthen enforcement activities.

ESMA found that:

  • CAs have a good understanding of the types of distribution methods used in their jurisdictions and where the boundary between investment advice and information lies. However, limited supervision was performed to verify whether clients are receiving investment advice in practice or have the perception that they are receiving advice;
  • Most CAs do not perform supervision which is targeted at the particular behaviour of a firm or group of firms as part of a specific suitability project;
  • Most CAs stated they used a wide range of tools to monitor the main aspects of advice suitability but only a limited number of regulators provided specific information on the tools they use to supervise compliance with the suitability requirements;
  • Enforcement action, such as imposing fines or placing restrictions on firms' activities, was rarely taken. Many CAs considered their supervisory approach alone was sufficient to address issues; and
  • In many cases, CAs could improve how they publicly communicate with stakeholders on their supervision and enforcement activities and findings.

A copy of the Report is available here: _final_report.pdf

(ii) ESMA publishes and updates Q&A relating to the provision of contracts for dfferences ("CFDs") and other speculative products to retail investors under MiFID

On 8 April 2016, ESMA published a new questions and answers document relating to the provision of CFDs and other speculative products to retail investors under MiFID (the "Q&A").

The purpose of the Q&A is to promote common supervisory approaches and practices in the application of MiFID and its implementing measures to certain key aspects that are relevant when CFDs and other speculative products are marketed and sold to retail clients. It does this by providing responses to questions identified by CAs in relation to practical aspects of the day-to-day supervision of firms involved in offering these products. The Q&As are targeted at CAs. However, the answers are also intended to help firms by providing clarity on MiFID rules. The Q&A has been produced with reference to the current (i.e. MiFID I) legislative framework that is currently in application. However, it should be noted that the principles and requirements underpinning the content of the Q&A will remain unchanged once the MiFID II package, which overall strengthens the protections for investors, enters into application.

For a copy of the Q&A in full see: 590_qa_on_cfds_and_other_speculative_products_-_mifid.pdf

(iii) ESMA updates document on waivers from MiFID pre-trade transparency requirements (June 2016)

On 20 June 2016, ESMA published an updated version of the waiver document (the "Waiver Document") that sets out its assessment of applications for waivers from pretrade transparency requirements under MiFID.

The Waiver Document is aimed at competent authorities under MiFID to ensure that, in their supervisory activities, their actions converge with the opinions provided by ESMA. The examples are also intended to provide clarity for firms on the MiFID requirements for pretrade transparency.

In the updated Waiver Document there is a new ESMA opinion relating to large-in-scale waivers. The new opinion, which is written in red, provides an example of functionalities that satisfy the MiFID criteria

A copy of the Waiver Document is available at the following link: 241h_esma_opinions_cesr_positions_on_pre-trade_waivers_0.pdf

(iv) ESMA publishes statement on MiFID practices for firms selling financial instruments subject to the BRRD resolution

On 2 June 2016, ESMA issued a statement (the "Statement") to all credit institutions and investment firms, clarifying how these entities should apply the relevant MiFID requirements governing the distribution of financial instruments (which are "bail-in-able" under the Bank Recovery and Resolution Directive 2014/59/EU ("BRRD") resolution regime) to clients, both on an advised and non-advised basis, as well as in the context of portfolio management.

In the Statement, ESMA outlines its concerns that, following the implementation of the BRRD, firms are likely to issue a significant amount of potentially loss-bearing instruments to fulfil their obligations and that investors, particularly retail investors, may be unaware of the risks they may face when buying such instruments.

ESMA noted that aside from the general duties of conduct, MiFID contains several provisions which apply to firms when selling or advising on the sale of financial instruments, including those subject to the resolution regime, or providing portfolio management, namely:

  • Provision of information to clients;
  • Provision of investment advice;
  • Suitability and appropriateness; and
  • Conflicts of interest.

A copy of the Statement can be found here:

Markets in Financial Instruments Directive II ("MiFID II")

(i) ESMA risk assessment on temporary exclusion of exchange-traded derivatives from Articles 35 and 36 of MiFIR

On 4 April 2016, ESMA published its risk assessment on the temporary exclusion of exchange-traded derivatives ("ETDs") from Articles 35 and 36 of the Markets in Financial Instruments Regulation ("MiFIR").

Article 35 of MiFIR requires CCPs to provide access to trading venues on a nondiscriminatory basis to clear transactions executed on different trading venues. Article 36 of MiFIR requires trading venues to provide access on a non-discriminatory basis, including trade feeds, to CCPs that wish to clear transactions executed on these trading venues. Under Article 52(12) of MiFIR, the European Commission is required to report to the European Parliament and the Council of the EU on assessments of the need to temporarily exclude ETDs that require open and non-discriminatory access to CCPs and trading venues from the scope of Articles 35 and 36 of MiFIR.

The report prepared by the European Commission will be based on a risk assessment carried out by ESMA and had to be submitted by 3 July 2016. Depending on its conclusions, the European Commission may adopt a delegated act to exempt ETDs from the scope of Articles 35 and 36 of MiFIR for up to 30 months following the date MiFIR enters into force.

Articles 35 and 36 of MiFIR establish that CAs may only grant access to a particular CCP or trading venue where granting access would not: 1) require an interoperability agreement for ETDs, or 2) threaten the smooth and orderly functioning of the market, in particular due to liquidity fragmentation, or would not adversely affect systemic risk.

In its risk assessment, ESMA provides an overview of the market for ETDs and of existing access arrangements in the EEA including any potential benefits and risks stemming from open access provisions for ETDs. It concludes that the possible risks stemming from access related to ETDs are already appropriately covered in Article 35 and 36 of MiFIR and the draft RTS on access to CCPs and trading venues and consequently does not recommend that ETDs should be temporarily exempted from the scope of Articles 35 and 36.

ESMA's full risk assessment can be found here:

(ii) European Commission publishes Delegated Regulation under MiFID II as regards organisational requirements and operating conditions for investment firms

On 25 April 2016, the European Commission adopted a Delegated Regulation (C(2016) 2398 final) (and Annexes) supplementing the MiFID II Directive as regards organisational requirements and operating conditions for investment firms and defined terms (the "Delegated Regulation").

The Delegated Regulation aims at specifying, in particular, the rules relating to exemptions, the organisational requirements for investment firms, data reporting services providers, conduct of business obligations in the provision of investment services, order execution rules, client order handling, small and medium-sized enterprises ("SME") growth markets, thresholds above which the position reporting obligations apply and the criteria under which the operations of a trading venue in a host Member State could be considered as of substantial importance for the functioning of the securities markets and the protection of the investors.

The Delegated Regulation is based on final technical advice on the MiFID II Directive that ESMA provided to the European Commission in December 2014 (the Council of the EU has decided not to object). The European Parliament will now consider the Delegated Regulation and – if cleared without objection – the Delegated Regulation will enter into force 20 days after its publication in the Official Journal of the EU, applying from the date that the MiFID II Directive applies (3 January 2018).

A copy of the Delegated Regulation can be found at:

(iii) European Commission adopts Delegated Regulation for determination of market material in terms of liquidity relating to trading halt notifications

On 26 May 2016, the European Commission adopted a Delegated Regulation (C(2016) 3020 final) supplementing the MiFID II Directive with regard to RTS for the determination of a material market in terms of liquidity relating to notifications of a temporary halt in trading (the "Delegated Regulation").

Under Article 48(5) of MiFID II, Member States must require a regulated market to be able to halt or constrain trading if there is a significant price movement in a financial instrument on that market or a related market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction that took place. The parameters used for deciding to halt trading and any material changes to those parameters must be reported to the competent authority, which in turn must report them to ESMA. This requirement is extended to multilateral trading facilities ("MTFs") and organised trading facilities ("OTFs") by virtue of Article 18(5) of MiFID II.

In this context, Article 48(12)(d) of MiFID II Directive requires ESMA to develop draft RTS further specifying the determination of where a regulated market is material in terms of liquidity in a given instrument for that market. The draft RTS were submitted to the European Commission on 28 September 2015.

If the Delegated Regulation is adopted by the European Parliament without objection (the Council of the EU has already decided not to object to it), it will enter into force 20 days after publication in the Official Journal of the EU and it will apply from the date appearing in the second sub-paragraph of Article 93(1) of MiFID II (3 January 2018).

A copy of the Delegated Regulation can be found at:

(iv) European Commission adopts Delegated Regulation on RTS criteria for determining whether derivatives subject to clearing obligation should be subject to trading obligation

On 26 May 2016, the European Commission adopted a Delegated Regulation (C(2016) 2710 final) supplementing MiFIR with regard to RTS on criteria for determining whether derivatives subject to the clearing obligation should be subject to the trading obligation (the "Delegated Regulation").

MiFIR lays down a trading obligation applicable to non-intra group transactions in sufficiently liquid contracts when traded by counterparties subject to clearing under EMIR. The application of the trading obligation is defined under Article 32 of MiFIR, which outlines the process for deciding which derivatives should be declared subject to mandatory trading.

Once a class of derivatives has been mandated as subject to the clearing obligation under EMIR, ESMA must determine whether those derivatives (or a subset of such) should be subject to the trading obligation, meaning they can only be traded on a regulated market, MTF or OTF. Whether or not a class of derivatives subject to the clearing obligation should also be made subject to the trading obligation will be determined by the venue test (the class of derivatives must be admitted to trading or traded on at least one admissible trading venue) and the liquidity test (whether the derivatives are "sufficiently liquid") and there is sufficient third party buying and selling interest.

The Delegated Regulation provides clarity in the determination of a class/subset of class of derivatives that is sufficiently liquid. Article 2 specifies the criteria with respect to the average frequency of trades, Article 2 sets out the average size of trades, Article 4 details the number and type of active market participants and Article 5 notes the average size of spreads. Together, these indicate the level of third-party buying and selling interest, laid out in Article 1.

The Delegated Regulation is subject to consideration by the European Parliament and the Council of the European Union. Once final, the adopted RTS will apply directly across the EU from the date that MiFID II applies (3 January 2018).

To view the Delegated Regulation on the draft RTS in full see:

To continue reading this article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.