ESMA Unveils Measures to Curb Securities Lending to Retail Investors

<p>

The European Union's securities markets regulator has
released the guidelines for lending securities to retail clients. The statement
highlighted the obligations of the companies dealing in securities as well as
the guidelines aimed at protecting traders.</p><p>The European Securities and
Markets Authority (<a href="https://www.financemagnates.com/tag/esma/" target="_blank" rel="follow">ESMA</a>) released
the guidelines under the Markets in Financial Instruments Directive (MiFID
II), a legislative framework developed by the EU to regulate the securities
markets, investment intermediaries, and trading platforms. </p><p>ESMA Tightens Securities Rules</p><p>One of the guidelines by the ESMA is that the revenues made from the lending of securities should accrue to the retail clients after the deduction
of the costs of services incurred by the companies. In addition, the <a href="https://www.financemagnates.com/terms/e/esma/">ESMA</a>
stated that the consent of the retail clients should not be sought through the
firms' general terms and conditions. </p><p>The authority added that
it will continue to monitor the activities of the securities lenders and their
engagement with the retail clients and issue any further guidance to the
European Commission regarding securities lending. </p><p>On top of that, the ESMA
has issued stringent guidelines on how a company may use the assets of retail
clients. The guidelines also outline how the assets of the retail clients should be protected when the securities firms lend them out. </p><p>"A firm is required
to make adequate arrangements to safeguard the ownership rights of their
clients and to prevent the use of clients' financial instruments deposited in
their accounts except where the clients have consented," the ESMA
explained.</p><p>Additional Measures </p><p>"The firms shall
adopt specific arrangements to ensure that the borrowers of the clients'
financial instruments provide sufficient collateral," the regulator
added. Additionally, the company shall continue monitoring the appropriateness
of the collateral in relation to the value of the client's financial instrument." </p><p>The new set of
regulations arrived the same day the ESMA announced that it was <a href="https://www.financemagnates.com/cryptocurrency/esma-seeks-crypto-industry-input-on-mica-regulatory-framework/" target="_blank" rel="follow">seeking
comments</a> about the EU's
recently adopted Markets in Crypto-Assets Regulations (MiCAR). Specifically,
the regulator is seeking the opinion of the crypto-asset service providers (CASPs)
on, among other things, conflict of interest identification and the handling of
complaints. </p><p><a href="https://www.financemagnates.com/cryptocurrency/mica-takes-off-eu-council-approves-crypto-law/" target="_blank" rel="follow">Finance
Magnates</a> reported in
May that the Council of the European Union had <a href="https://www.financemagnates.com/cryptocurrency/mica-takes-off-eu-council-approves-crypto-law/" target="_blank" rel="follow">adopted
the MiCAR</a>, which the EU
parliament passed in April. The MiCAR is considered the most comprehensive
legislation for digital assets.</p><p>eToro's CFDs fees; hirings at Exinity, Scope Markets; <a href="https://www.financemagnates.com/forex/news-nuggets-12-july-etoros-cfds-fees-hirings-at-exinity-scope-markets/" target="_blank" rel="follow">read today's news nuggets</a>.</p>

This article was written by Jared Kirui at www.financemagnates.com.