Euro Regulators: Firms O.K. On Inducement Rules

11-03-2009 | Source: Compliance Reporter

The Committee of European Securities Regulators has given investment firms a generally clean bill of health on complying with rules on inducements. CESR's comments came as part of a consultation on best practices. Article 26 of the Markets in Financial Instruments Directive sets out requirements for investment firms in regards to receiving or providing fees, commissions or non-monetary benefits.

Most investment firms understood the MiFID inducements rules and have taken measures to ensure compliance, CESR officials said in a related report. Differences in arrangements and procedures between firms generally were the result of the scale and nature of firms' business and the degree to which the rules had had an impact. Only a few firms, mostly those providing portfolio management services, reported that they had changed their remuneration structure as a result of the rules.

Among other things, CESR found that most investment firms use a summary form to disclose to clients third-party payments and non-monetary benefits they provide or receive. Officials noted variations in the degree to which these disclosures gave sufficient information to enable clients to make informed investment decisions, although they added that a large majority of firms said clients did not ask for more information.

Feedback is due by Dec. 22. A CESR spokeswoman did not return a call.