MiFID rules related to sustainability: application of the requirements relating to client sustainability preferences and publication of ESMA’s consultation paper on MiFID II product governance guidelines

Application of Commission Delegated Regulation 2021/1253 of 21 April 2021 amending Delegated Regulation 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms (Commission Delegated Regulation 2021/1253)

The CSSF would like to remind supervised entities that from 2 August 2022 onwards, the date of application of Commission Delegated Regulation 2021/1253, providers of investment advisory and discretionary portfolio management services are required to obtain specific information on their clients’ preferences regarding sustainable investments and meet such preferences, while also meeting their other investment objectives and taking into account their financial situation and knowledge and experience.

The European Securities and Markets Authority (ESMA) is currently finalising the update of its “Guidelines on certain aspects of the MiFID II suitability requirements” in order to take into consideration these amendments. These guidelines will provide firms with further guidance on the application of the new requirements.

Even in the absence of these guidelines, the CSSF expects supervised entities that provide investment advisory or discretionary portfolio management services to collect and take into account all relevant information related to the sustainability preferences of new clients as from 2 August 2022 onwards, and to update existing client information at the latest at the next regular update of the client’s profile.

The CSSF is aware that sustainability related, product-level information is only progressively becoming available. The CSSF expects supervised entities to monitor the developments of the regulatory framework and the publication of the above-mentioned guidelines and to continue to adapt their processes and governance accordingly.

ESMA consultation on the update of its MiFID II product governance guidelines

Further sustainability-related amendments to MiFID II framework will apply as from 22 November 2022, as per Commission Delegated Directive (EU) 2021/1269 of 21 April 2021 amending Delegated Directive 2017/593 as regards the integration of sustainability factors into the product governance obligations.

In that context, the CSSF would like to draw attention to the publication by ESMA, on 8 July 2022, of a Consultation Paper in relation to an update of its “Guidelines on MiFID II product governance requirements”. The Consultation Paper is addressed to investors and consumer organisations, and to all firms manufacturing and/or distributing products as defined under MiFID II. The consultation closes on 7 October 2022.