The FT's recent headline "Markets break out in Mifid II sweat as new rules loom" underlines the enormity of getting to grips with the approx 1.4m paragraphs of regulations. The scale of Mifid II's requirements is still unclear; the call for greater transparency and increased investor protection affect an unprecedented number of securities markets participants & processes.
Roadshow organisers need to be aware that the ESMA has published some quarterly guidance which may affect how roadshows are dealt with:
“ESMA expects investment firms subject to Article 24(7) or Article 24(8) of MiFID II to carefully assess whether corporate access services such as field trips, conferences and individual meetings involving a corporate issuer and facilitated by an investment firm are material benefits, or alternatively could qualify as an acceptable minor non-monetary benefit.
For example, corporate access services offered by a third party that are by their nature exclusive, such as individual meetings or field trips with a corporate, may involve the allocation of valuable resources by the provider (Recital 30 of the Delegated Directive) and / or have a value to the recipient such that the benefit is not minor in nature and scale and could influence their behaviour (Article 12(3) of the Delegated Directive). Conversely, ESMA considers that where a corporate’s investor relations office (or its ‘house broker’ if the service is paid for by the issuer) organises investor ‘road shows’ to support a capital raising event and it is freely and publicly open to analysts from investment firms and other investors it could be capable of qualifying as acceptable minor non-monetary benefits under Article 12(3). As set out in Q&A 6, it will be for the recipient investment firm to determine whether or not it can accept a benefit.”
For more information on ESMA’s guidance HERE.
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