SPAIN: CNMV Adopts ESMA Guidelines on Requirements of Suitability for MIFID II

Monday June 5 2023

The Spanish National Securities Market Commission (CNMV) has notified the European Securities and Markets Authority (ESMA) on June 2^nd, 2023, that it complies with the Guidelines relating to certain aspects of the adequacy requirements of MiFID II and, therefore, it will take them into account, as already anticipated in the statement of July 18^th, 2022. 

The most relevant aspects of these Guidelines are: 

• When entities collect information on customer sustainability preferences, they must consider all the aspects mentioned in the definition of sustainability preferences in article 2.7 of the Delegated Regulation, in a sufficiently granular manner to allow an adjustment of the sustainability characteristics of the products. financial instruments with the client’s sustainability preferences. 
• As indicated by the CNMV in its communication on this matter in July 2022, the obligation to collect information on customer sustainability preferences is applicable from August 2022. Entities must have adapted their systems and processes so that they are capable of to ask their clients the pertinent questions to identify their preferences in relation to sustainability, when they must carry out a suitability test. 
• The suitability assessment in relation to sustainability preferences should be performed after suitability has been assessed against the other factors in the suitability assessment, knowledge and experience, financial condition and other investment objectives of the customer; that is, in a second step after identifying the range of initially suitable products for the customer. 
• Entities may not recommend a product that does not meet the customer’s sustainability preferences. Customers will be able to tailor their initial sustainability preferences as appropriate.  

The new text of the Guidelines has also considered the results of the Joint Supervisory Action (CSA) carried out by ESMA and the national competent authorities in 2020 on the application of the adequacy obligations of MiFID II, and includes certain adjustments to ensure alignment between these Guidelines and those of convenience and to incorporate the changes introduced by the “Capital Markets Recovery Package”1 (“Quick Fix”) in article 25.2 of MiFID II in relation to the change of investments. 

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