ESMA_QA_1760

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1760

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Regulatory Context

Regulation : MIF2

Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Investor Protection and Intermediaries

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Suitability

Subject Matter: Suitability and appropriateness

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Question

Submission Date: 10 October 2016

Shall a suitability report be provided to the client when the advice given is not to buy or sell a financial instrument?

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ESMA Answer

Answer Date: 10-10-2016

[ESMA35-43-349 MiFIDII Investor protection Q&As Ch2 question 5] Yes. Firms providing investment advice are required to always provide the client with a suitability report, irrespective of the specific recommendation given, including the advice not to buy, hold or sell a financial instrument.  In this regard, Recital 87 of the MiFID II Delegated Regulation specifically clarifies that “investment firms should undertake a suitability assessment not only in relation to [when] recommendations to buy a financial instrument are made but for all decisions whether to trade including whether or not to buy, hold or sell an investment”.

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This document was automatically extracted from the ESMA EMIR Q&A database.