The
European Securities and Markets Authority (ESMA), the European Union's (EU)
financial markets regulator, has released a supervisory briefing on copy
trading firms. The briefing aims to enhance investor protection and promote
supervisory convergence across the EU in accordance with ESMA's objectives.
ESMA's Take on Copy
Trading Services and MiFID II Requirements
Copy
trading services allow investors to automatically replicate the trading
strategies of more experienced traders. With the rising popularity of these
services, ESMA seeks to ensure that firms comply with the Markets in Financial
Instruments Directive II (MiFID II
MiFID II
MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina
MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina
Read this Term) requirements.
The
supervisory briefing provides guidance on the qualification of copy trading as
an investment service, and it outlines supervisory expectations in various areas,
including information requirement, product governance, suitability and appropriateness
assessment, remuneration and inducement and qualifications of traders whose
trades are being copied.
According
to the 25-page supervisory briefing
published on Thursday, regulated firms should provide transparent and
accurate information on marketing communications and costs and charges
associated with copy trading services. Offered products must cater to clients'
best interests, while companies should ensure that the traders whose trades are
copied have the necessary qualifications and expertise.
ESMA issues supervisory briefing on firms offering copy #trading services, in accordance w/ its objective of fostering investor protection and promoting supervisory convergence → https://t.co/B55r18MpqE. #ESMAcartoons @EU_Finance
But what does investor protection mean to us? 👇
— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) March 30, 2023
"The
supervisory briefing sets out the supervisory expectations of both ESMA and
National Competent Authorities (NCAs) and also includes indicative questions
that supervisors could ask themselves, or firms, when assessing firms'
approaches to the application of the relevant MiFID II rules," ESMA
commented in the press release.
ESMA and
NCAs will persist in tracking progress in the copy trading industry and may
consequently implement additional measures in the future to guarantee that copying
services align with the relevant MiFID II regulations and that investment
services persistently cater to the best interests of the clients.
The
supervisory brief prepared by ESMA considers the Q&A published back in June
2012 relating to the legal qualification of the automatic execution of trade
signals.
Is Copy Trading Still
Popular in 2023?
Launched in
2010, the copy and social trading market is still extremely popular thirteen years
later. According to a report by The Insight Partners, it is expected to
grow at a compounded annual rate of 7.8 percent, reaching a market size of
$3.77 billion by 2028. The industry's market size was at $2.2 billion at the
end of 2021.
Finance
Magnates Intelligence studied the prevalence of social trading services among
FX/CFD brokers. To do this, we examined all the brokers listed in the Finance
Magnates Volume Rank featured in each edition of our Quarterly Intelligence
Report. We then investigated whether these ranked brokers offer any type of
social trading feature. Our results revealed that 37.7% of the brokers within
the volume rank provide some form of social trading options for their clients.
However,
social and copy trading account for only 1-3% of the total trading volume for most
platforms (excluding eToro and NAGA, which specialize in this type of offering).
To get the bigger picture on the future of 'social trading', get our Latest
Quarterly Intelligence Report HERE.
ESMA
ESMA
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
Read this Term's
action may have followed an announcement earlier this year when the regulator said it
would check the quality of promotional materials in the financial industry,
focusing mainly on risky products. These include FX/CFD brokers' offerings and
social and copy trading services.
Saxo's
Presents New Portal and JPX Gets into DeFi, read today’s news
nuggets.
The
European Securities and Markets Authority (ESMA), the European Union's (EU)
financial markets regulator, has released a supervisory briefing on copy
trading firms. The briefing aims to enhance investor protection and promote
supervisory convergence across the EU in accordance with ESMA's objectives.
ESMA's Take on Copy
Trading Services and MiFID II Requirements
Copy
trading services allow investors to automatically replicate the trading
strategies of more experienced traders. With the rising popularity of these
services, ESMA seeks to ensure that firms comply with the Markets in Financial
Instruments Directive II (MiFID II
MiFID II
MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina
MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina
Read this Term) requirements.
The
supervisory briefing provides guidance on the qualification of copy trading as
an investment service, and it outlines supervisory expectations in various areas,
including information requirement, product governance, suitability and appropriateness
assessment, remuneration and inducement and qualifications of traders whose
trades are being copied.
According
to the 25-page supervisory briefing
published on Thursday, regulated firms should provide transparent and
accurate information on marketing communications and costs and charges
associated with copy trading services. Offered products must cater to clients'
best interests, while companies should ensure that the traders whose trades are
copied have the necessary qualifications and expertise.
ESMA issues supervisory briefing on firms offering copy #trading services, in accordance w/ its objective of fostering investor protection and promoting supervisory convergence → https://t.co/B55r18MpqE. #ESMAcartoons @EU_Finance
But what does investor protection mean to us? 👇
— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) March 30, 2023
"The
supervisory briefing sets out the supervisory expectations of both ESMA and
National Competent Authorities (NCAs) and also includes indicative questions
that supervisors could ask themselves, or firms, when assessing firms'
approaches to the application of the relevant MiFID II rules," ESMA
commented in the press release.
ESMA and
NCAs will persist in tracking progress in the copy trading industry and may
consequently implement additional measures in the future to guarantee that copying
services align with the relevant MiFID II regulations and that investment
services persistently cater to the best interests of the clients.
The
supervisory brief prepared by ESMA considers the Q&A published back in June
2012 relating to the legal qualification of the automatic execution of trade
signals.
Is Copy Trading Still
Popular in 2023?
Launched in
2010, the copy and social trading market is still extremely popular thirteen years
later. According to a report by The Insight Partners, it is expected to
grow at a compounded annual rate of 7.8 percent, reaching a market size of
$3.77 billion by 2028. The industry's market size was at $2.2 billion at the
end of 2021.
Finance
Magnates Intelligence studied the prevalence of social trading services among
FX/CFD brokers. To do this, we examined all the brokers listed in the Finance
Magnates Volume Rank featured in each edition of our Quarterly Intelligence
Report. We then investigated whether these ranked brokers offer any type of
social trading feature. Our results revealed that 37.7% of the brokers within
the volume rank provide some form of social trading options for their clients.
However,
social and copy trading account for only 1-3% of the total trading volume for most
platforms (excluding eToro and NAGA, which specialize in this type of offering).
To get the bigger picture on the future of 'social trading', get our Latest
Quarterly Intelligence Report HERE.
ESMA
ESMA
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t
Read this Term's
action may have followed an announcement earlier this year when the regulator said it
would check the quality of promotional materials in the financial industry,
focusing mainly on risky products. These include FX/CFD brokers' offerings and
social and copy trading services.
Saxo's
Presents New Portal and JPX Gets into DeFi, read today’s news
nuggets.
