In 2014, regulators announced that fund managers should bundle payments to securities firms for research and trade execution, with the aim of avoiding conflicts of interest in the provision of investment research and ultimately increasing investor protection. attempted to suppress the practice.
However, in 2021, policymakers began to ease these restrictions by once again allowing bundling for research on small and medium-sized enterprises (market capitalization of less than €1 billion).
Now, bundling restrictions will be further eased “to allow investment firms more flexibility in how they choose to pay for execution services and research,” the regulatory document said.
“The aim of these recommendations is to support the revitalization of the investment research market, while balancing this objective with investor protection,” ESMA said.
To this end, “this recommendation further clarifies the conditions that must be met by payments for research so that it is not considered an inducement,” the paper states.
Regardless of how companies pay for research, certain measures must be taken to ensure that these payments are consistent with the quality, utility, and value of the research used, including annual evaluations of the competency of the research. You must comply with the terms. It was contributing to better investment decisions. ”
The consultation is open until January 28, 2025. ESMA aims to finalize guidance for policymakers in the second quarter of 2025.
Separately, ESMA has also launched a consultation on proposed changes to the prospectus regulation and amendments to harmonize prospectus civil liability provisions.
The regulator said the recommendations would ease regulatory burdens and facilitate European capital market activity by simplifying listing requirements for listed companies “while preserving transparency, investor protection and market integrity.” He said it was aimed at.
These consultations will run until December 31, with the regulator aiming to finalize policy advice by the second quarter of 2025.
