The European Commission (EC) is proposing to abolish execution-only services for non-complex financial products to eliminate uncertainty on which ones qualify as 'simple'.
Under the Markets in Financial Instruments Directive (MiFID), investment firms can provide investors with a way to buy and sell certain financial instruments without any assessment of the appropriateness of the given product.
These "execution-only" services are only available when certain conditions are fulfilled, namely when it involves so-called non-complex financial instruments.
But in today's consultation paper the EC says it is aware of a degree of uncertainty on what can qualify as a non-complex product and on the services that can be covered by this regime.
"In the light of the intrinsic complexity of investment services", it proposes an outright ban to solve the problem.
The consultation paper suggests retail client who want execution-only services should always expect a higher standard of service from intermediaries, including on-line brokerage which is the typical channel for this kind of services.
It is also consulting on whether all or some UCITS vehicles could be excluded from the list of non-complex financial instruments.
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