ESMA has published a consultation paper on proposed guidelines on remuneration policies and practices under the Markets in Financial Instruments Directive (2004/39/EC) (“MiFID“) (and, in future, as revised to support the consistent implementation of MiFID amending legislation (“MiFID II“)).
The guidelines would aim to strengthen investor protection and would seek to improve the implementation of the existing MiFID conflicts of interest and conduct of business requirements relating to remuneration (being all forms of payments or direct or indirect benefits) of all persons involved in the provision of investment and/or ancillary services, especially those with material influence over the services provided, the conduct of business risk profile, or corporate behaviour.
In particular, the guidelines would include requirements to, amongst other things: ensure that remuneration is not paid in a manner which intends to circumvent relevant requirements under MiFID; design and monitor remuneration policies and practices to take account of potential conduct of business and conflicts of interest risks; and place adequate controls on the implementation of their remuneration policies and practices to ensure that they deliver the intended outcomes.
Comments can be made on the consultation paper until 7 December 2012. ESMA expects to publish a final report, and final guidelines, by the second quarter of 2013.