ESMA Introduces New Regulatory Requirements

ESMA Introduces New Regulatory Requirements


The European Securities and Markets Authority (ESMA) wants to increase investor protection means for users, and has already made a move with the European Commission in regards to a set of investor safety recommendations. The aim of this is to ease the decision-making process for investors.

More specifically, the regulator wants to put a break on aggressive marketing tactics that have started to define a number of EU-based brokers and financial firms. In particular, ESMA wishes to tackle the gamification of trading – the inclusion of game-like mechanics into a non-gaming domain to stimulate user interest. There are also concerns raised by ESMA on misleading marketing campaigns on social media that will have to be dealt with.

Furthermore, ESMA wants a granted permission for it and other regulators to have the full authority, and right, to require financial firms to apply risk warnings on tradeable assets when asked to do so. These would be less complementary and more severe warning cycles, unlike the current ones that are considered generic and easy-to-miss.

The last of the major points ESMA stresses over has to do with machine readability and a potential standard EU document format. Machine readability is an automated processes for reading and filing documents that would greatly help with work overload issues, while a standard union-wise document would make organization and layering much easier.

The EU regulator is not alone in this endeavor. The US's demands payment-for-order-flow (PFoF) restrictions, and the same goes for ASIC.

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