Delegated act · European Commission
Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits
The MiFID II Delegated Directive on safeguarding client financial instruments and funds (deposits, use of client assets, title transfer collateral, a single officer responsible, auditor reports), product governance duties for manufacturers and distributors, and inducements, including rules for independent advice, portfolio management and research. Since amended, including by Delegated Directives 2021/1269 (sustainability) and 2026/374 (research payment).
Details
| Reference | Delegated Directive (EU) 2017/593 |
|---|---|
| Issuer | European Commission |
| Published | 31 Mar 2017 |
| CELEX | 32017L0593 |
| In force / applies from | 20 Apr 2017 |
Provisions it relates to
- Article 16 MiFID II · Organisational requirementsLegal basis
- Article 24 MiFID II · General principles and information to clientsLegal basis
Documents that refer to it
- Q&AAnsweredExplicit reference
AI summaryIn a Commission answer, firms setting the negative target market for a product that does not consider sustainability factors must also consider any clients' sustainability-related objectives the product is incompatible with, though depending on the product this may result in no negative target market for that criterion.
- Q&AAnsweredExplicit reference · 90%
AI summaryFor independent advisers and portfolio managers, third-party material is a minor non-monetary benefit only if it is not substantive in content, such as short-term market commentary; substantive research is research subject to Article 13 of the Delegated Directive whatever the provider calls it.
- Q&AAnsweredExplicit reference · 90%
AI summaryManufacturers must design charging structures that the target market can understand: no artificially low introductory costs, unnecessarily complex fee formulas, excessive or split cost components or duplicated fees, and testing of disclosures where costs are particularly complex.
- Q&ARejectedExplicit reference
AI summaryAsked, in Spanish, what happens when staff whose MiFID knowledge and competence certification is current miss the annual refresher training, for example while on sick leave: must they redo the full course? ESMA rejected the question, so there is no answer.
- Q&ARejectedExplicit reference
AI summaryAsked whether the investment firm or the third party it pays (such as a law or accounting firm) must provide the quality enhancement required for inducements under Article 24(9) MiFID II. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference
AI summaryIn a Commission answer, dividends paid to a majority shareholder of a small closely held firm who is also an employee, manager and board member count as remuneration under Article 2(5) of the MiFID II Delegated Regulation, so the remuneration policy rules in Article 27 apply.
- Q&AAnsweredExplicit reference · 90%
AI summaryMacro-economic analysis can be research paid from a research payment account if it meets Recital 28 of the MiFID II Delegated Directive, informing views on instruments, issuers or markets and suggesting an investment strategy, as ESMA considers most macro-economic analysis does.
- Q&AAnsweredExplicit reference · 90%
AI summaryMoney in a research payment account belongs to the investment firm once charged to clients, but must be controlled by the firm and used only to buy research for clients; it becomes client money only when rebated, and the firm should align charges with research spending and keep control if administration is outsourced.
- Q&AAnsweredExplicit reference · 90%
AI summaryThe definition of acceptable minor non-monetary benefits in Article 12(3) of the MiFID II Delegated Directive applies to every investment and ancillary service, not only portfolio management and independent advice, and such benefits may be described generically in disclosures.
- Q&AAnsweredExplicit reference
AI summaryIn a Commission answer, firms setting the negative target market of a product that does not consider sustainability factors must consider any clients' sustainability-related objectives the product is incompatible with, though depending on the product this may lead to no negative target market for that criterion.
- Q&AAnsweredExplicit reference · 90%
AI summaryTo show that costs do not undermine a product's return expectations (Article 9(12)(b) of the MiFID II Delegated Directive), manufacturers should simulate returns net of all implicit and explicit costs at the design stage, for example by scenario analysis, Monte Carlo methods, the PRIIPs moderate scenario, comparison with similar products or fair-value calculations, using robust, documented methods that also reflect typical taxes.
- Q&AAnsweredExplicit reference · 90%
AI summaryManufacturers must have robust, documented, management-approved procedures to identify and quantify all product and likely service costs (including inducements) and to check that the cost structure, including how costs accrue, suits the target market, for example avoiding high up-front costs for clients with short horizons.
- Q&ARejectedExplicit reference
AI summaryAsked whether underwriting or placing fees that do not depend on the number of securities placed are inducements, and how they should be disclosed to investors. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference · 90%
AI summaryTo meet the quality-enhancement test in Article 11(2)(a) of the MiFID II Delegated Directive, an inducement must fund an additional or higher-level service that goes beyond what is legally required, is provided to the client concerned and is proportionate to the inducements received; ESMA gives examples and stresses a case-by-case assessment.
FCA Handbook
Handbook provisions whose source note cites it:
- COBS 2.3A.8R · Fees, commissions or non-monetary benefits which are designed to enhance the quality of a service
- COBS 2.3A.9R · Fees, commissions or non-monetary benefits which are designed to enhance the quality of a service
- COBS 2.3A.10R · Disclosure of payments or benefits received from, or paid to, third parties
- COBS 2.3A.11R · Disclosure of payments or benefits received from, or paid to, third parties
- COBS 2.3A.12R · Disclosure of payments or benefits received from, or paid to, third parties
- COBS 2.3A.13R · Disclosure of payments or benefits received from, or paid to, third parties
- COBS 2.3A.14R · Disclosure of payments or benefits received from, or paid to, third parties
- COBS 2.3A.15R · Inducements relating to the provision of independent advice, restricted advice and portfolio management services to retail clients in the United Kingdom
- COBS 2.3A.16R · Inducements relating to the provision of independent advice and portfolio management services to retail clients outside the United Kingdom or to professional clients
- COBS 2.3A.19R · Acceptable minor non-monetary benefits
- COBS 2.3A.21G · Acceptable minor non-monetary benefits
- COBS 2.3A.22G · Acceptable minor non-monetary benefits
- COBS 2.3A.32R · Record keeping: inducements
- COBS 2.3B.3R · Receiving third party research without it constituting an inducement
- COBS 2.3B.4R · Conditions relating to the operation of the research payment account
- COBS 2.3B.5R · Conditions relating to the operation of the research payment account
- COBS 2.3B.7R · Conditions relating to the operation of the research payment account
- COBS 2.3B.8R · Conditions relating to the operation of the research payment account
- COBS 2.3B.11R · Governance and oversight of research payment accounts
- COBS 2.3B.12R · Governance and oversight of research payment accounts
- COBS 2.3B.13G · Governance and oversight of research payment accounts
- COBS 2.3B.16R · Other operational arrangements for research payment accounts
- COBS 2.3B.17G · Other operational arrangements for research payment accounts
- COBS 2.3B.18R · Other operational arrangements for research payment accounts
- COBS 2.3B.20R · Disclosure on request of payments made from a research payment account
- COBS 2.3C.2R · Requirement on a firm that executes orders and provides research to price and supply services separately
- COBS 2.3C.4G · Requirement on a firm that executes orders and provides research to price and supply services separately
- CASS 1A.3.1AR · The senior managers regime and the certification regime
- CASS 1A.3.2AR · The senior managers regime and the certification regime
- CASS 6.1.6R · Title transfer collateral arrangements
- CASS 6.1.6DR · Title transfer collateral arrangements
- CASS 6.2.2R · Requirement to have adequate organisational arrangements
- CASS 6.3.1R · Depositing safe custody assets with third parties
- CASS 6.3.4R · Depositing safe custody assets with third parties
- CASS 6.3.4A-1 · Depositing safe custody assets with third parties
- CASS 6.3.6AR · Third-party custody agreements
- CASS 6.4.1R · Non-retail clients
- CASS 6.4.1BG · Non-retail clients
- CASS 6.4.1CR · All clients
- CASS 6.4.2AR · All clients
- CASS 6.4.2BG · All clients
- CASS 6.4.3R · All clients
- CASS 6.6.2R · Records and accounts
- CASS 6.6.3R · Records and accounts
- CASS 6.6.34R · External custody reconciliations
- CASS 7.10.16R · Credit institutions and approved banks
- CASS 7.11.1R · Title transfer collateral arrangements
- CASS 7.11.4AR · Title transfer collateral arrangements
- CASS 7.12.2R · Requirement to have adequate organisational arrangements
- CASS 7.13.3R · Depositing client money
- CASS 7.13.8R · Selection, appointment and review of third parties
- CASS 7.13.10R · Selection, appointment and review of third parties
- CASS 7.13.12R · Client bank accounts
- CASS 7.13.20R · Diversification of client money
- CASS 7.13.21R · Diversification of client money
- CASS 7.13.21AR · Diversification of client money
- CASS 7.13.22R · Diversification of client money
- CASS 7.13.26R · Qualifying money market funds
- CASS 7.13.28R · Qualifying money market funds
- CASS 7.15.20R · External client money reconciliations
- CASS 10.1.7R · General provisions
- PROD 3.1.2R · Proportionate application of rules
- PROD 3.2.6R · Manufacture by more than one firm
- PROD 3.2.7R · Manufacture by more than one firm
- PROD 3.2.8R · Target market
- PROD 3.2.9G · Target market
- PROD 3.2.10R · Target market
- PROD 3.2.11R · Target market
- PROD 3.2.12R · Product testing
- PROD 3.2.13R · Product testing
- PROD 3.2.14R · Product testing
- PROD 3.2.15R · Product testing
- PROD 3.2.16R · Information disclosure to distributors
- PROD 3.2.19R · Review of financial instruments
- PROD 3.2.26R · Review of financial instruments
- PROD 3.2.28R · Conflicts of interest
- PROD 3.2.30R · Conflicts of interest
- PROD 3.2.32R · Oversight and training requirements
- PROD 3.2.33R · Oversight and training requirements
- PROD 3.2.36R · Compliance reports
- PROD 3.3.3R · Obtaining information from manufacturers
- PROD 3.3.8G · Distributing financial instruments manufactured by firms to whom PROD 3.2 does not apply including third country firms
- PROD 3.3.9R · Target market and distribution strategy
- PROD 3.3.14R · Target market and distribution strategy
- PROD 3.3.15R · Target market and distribution strategy
- PROD 3.3.16R · Target market and distribution strategy
- PROD 3.3.19G · Target market and distribution strategy
- PROD 3.3.20R · Oversight and training requirements
- PROD 3.3.21R · Oversight and training requirements
- PROD 3.3.22R · Oversight and training requirements
- PROD 3.3.25R · Compliance reports
- PROD 3.3.29G · Post-sale review
- PROD 3.3.31G · Information sharing
- PROD 3.3.33R · Responsibilities in chains of distributors
- SUP 3.10.7R · Client assets report: timing of submission
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