The European Securities and Markets Authority (ESMA) the EU’s financial markets regulator and supervisor, publishes today a supervisory briefing on firms offering copy trading services, in accordance with its objective of fostering investor protection and actively promoting supervisory convergence across the Union.
This briefing includes guidance on the qualification of copy trading services as an investment service and it sets out supervisory expectations with regard to MiFID II requirements on:
Information requirements (including on marketing communications and costs and charges)
Suitability and appropriateness assessment
Remuneration and inducement
Qualifications of traders whose trades are being copied
The supervisory briefing sets out the supervisory expectations of both ESMA and National Competent Authorities (NCAs) and also includes indicative questions that supervisors could ask themselves, or firms, when assessing firms’ approaches to the application of the relevant MiFID II rules.
ESMA and NCAs will continue monitoring the development on this topic and may therefore undertake other steps in the future to assure that copy trading is provided in a manner that is consistent with the applicable MiFID II requirements and that investment services continue being provided in the best interest of the client.