European securities regulators are studying the impact of recent reforms to cost and compensation disclosure requirements for retail investors.
The European Securities and Markets Authority (ESMA) published a paper on Wednesday seeking feedback on investor protection issues, primarily the impact of cost disclosure requirements that were introduced under reforms known as MiFID II.
The paper noted that, among other things, MiFID II aimed to strengthen the requirements for firms to make, and disclose, third-party payments and benefits.
The reforms also specified the conditions that must be met for a fee, commission or other form of compensation to enhance the quality of client service. They also set out disclosure requirements for these forms of compensation.
Now, the regulators are seeking to assess the impact of the reforms.
The ESMA paper noted that the initial feedback to these measures found, among other things, that “divergent interpretations and applications of the cost disclosure rules… makes it difficult for clients to compare costs between products, investment firms and [countries].”
The paper also seeks feedback on the form, content and timing of the disclosure requirements.
The deadline for responding to the consultation is Sept 6.
Following the consultation, the regulators will provide recommendations to European policymakers on whether any changes to the reforms are required.
In Canada, the Canadian Securities Administrators (CSA) have, in recent years, implemented their own notable cost and compensation disclosure reforms, particularly under the Client Relationship Model (CRM2) project.
They have also announced plans to conduct their own post-implementation review of these reforms. That project is expected to be completed by 2021.