We have written previously on the European Commission's capital markets recovery package. On 26 February 2021, one of the proposed measures, the Directive amending the MiFID II Directive (2014/65/EU) (the “Directive”) to help the EU's economic recovery from the COVID-19 pandemic was published in the Official Journal of the EU.
The Directive entered into force on 27 February 2021 (the day following that of its publication in the OJ). Member states will be required to transpose the Directive into national law within nine months of that date. The measures will become applicable 12 months after the entry into force of the Directive.
The major changes are the following:
- All client communications should be provided in electronic form (retail clients can still request that the communication be provided on paper).
- Product governance requirements for simple corporate bonds with “make-whole clauses” are removed.
- Position limits to only apply to agricultural contracts and significant or critical contracts.
- The obligation to produce best-execution under RTS 27 is suspended.
- The requirement for cost-benefit analysis is relaxed when switching in relation to services provided to professional clients (but professional clients retain the possibility to opt in).
- Joint payment of execution services and research on small and midcap issuers is permitted.