ESMA speaks on retail investment in capital markets

Natasha Casenave of ESMA has spoken on the investor protection safeguards that are needed to deal with the increasing retail participation in capital markets.  She said ESMA welcomes both the increased investment and the European Commission’s consumer protection initiative. She focused on:

• the impact of costs of funds and other vehicles on investor participation;
• the need to rethink retail distribution to be fairer and better to benefit retail investors. On this point, ESMA is to advise the Commission on disclosures that will be most helpful to retail investors, and the Commission will build this into its strategy.  Part of ESMA’s work will also look at the benefits of open finance. It plans to publish a call for evidence to flesh out the key issues of digital distribution – addressing such matters as its concerns that firms do not charge explicit commission but instead get payment for order flow; and
• disclosure challenges in the ESG era.