Under the original EU Markets in Financial Instruments Directive (MiFID) framework, investment firms must ensure that their personnel have the “skills, knowledge and experience” necessary for their particular functions. Article 25(9) of the revised MiFID (MiFID II) requires the European Securities and Markets Authority (ESMA) to establish guidelines that specify the criteria for assessing the knowledge and competence of an investment firm’s personnel that provide investment advice or information regarding financial instruments and services (Relevant Personnel). On April 23, ESMA set out its proposals for such guidelines in a consultation paper (CP). In the CP, ESMA notes that the national competent authorities (NCAs) of many EU member states already impose certain knowledge and competence obligations on Relevant Personnel; nevertheless, in ESMA’s view, MiFID II requires that such personnel have both an “appropriate qualification” as well as “appropriate experience”.
ESMA’s proposed guidelines would require NCAs to set out the “appropriate qualifications” applicable to Relevant Personnel in their jurisdiction, including where appropriate degree or other examination requirements. While NCAs would have some flexibility in establishing these requirements, at the very least ESMA’s proposed guidelines would require an NCA to establish express criteria—such as content, length and type of course—against which a given qualification may be measured. ESMA also proposes to require NCAs to identify a minimum period of “appropriate experience” for Relevant Personnel, which may differ depending on the corresponding qualification and the service being provided. ESMA has also proposed a potential grandfathering provision for Relevant Personnel with not less than five consecutive years of providing the same service which, at an NCA’s discretion and subject to a specific assessment by the investment firm in question, could be deemed to meet the MiFID II knowledge and competence standards.
The CP contains a series of questions for which ESMA requests public comment. The consultation period will close on July 10. ESMA intends to publish a final report in the fourth quarter of 2015, with the final guidelines taking effect from January 3, 2017.
The CP can be found here.
This coincides with the “ESMA Issues Call for Evidence on Virtual Currency” piece reported in Digital Assets and Virtual Currency.