The European Securities and Markets Authority (ESMA), the EU’s monetary markets regulator and supervisor, has revealed a dialogue paper on the digitalisation of retail funding providers and associated investor safety issues.
The regulator notes that you will need to make sure that (digital) advertising and marketing practices and commercials stay compliant with related rules by guaranteeing that these messages are truthful, clear and never deceptive. One of many points of clear and truthful presentation is understandable and clear wording and presentation of the funding corporations’ provide, together with with regard to monetary devices.
For example, corporations providing contracts for distinction (CFDs), Structured retail merchandise (SRPs) or Change traded merchandise (ETPs) could market these merchandise alongside “typical” shares or bonds on the identical webpage, itemizing them in the identical tab or webpage, together with presenting them as equal or related alternate options.
Shares and CFDs on these shares could also be labelled with the identical or the same code within the transaction system. In such conditions, it is extremely doubtless that the shopper will make a mistake and purchase the incorrect monetary instrument. Moreover, advertising and marketing communication could also be structured in such a method that doesn’t facilitate distinguishing whether or not the instrument marketed is a CFD, retail structured product or its underlying, as a result of the commercial or communication consists of solely (or principally) data on shares or commodities which might be the distributed product’s underlying. In actual fact, the agency could market merchandise not really provided by them.
It’s essential to stability the knowledge and point out all the mandatory data in a transparent method. When for instance a agency in its promoting makes use of ambiguous language similar to “the opportunity of selecting funding methods on shares” or “entry to investments on ETFs” while not making clear that they’re promoting CFDs, then this provision of data will not be clear and deceptive. On this case, the shopper will not be capable of instantly see or perceive the kind of product that’s provided. Not to mention perceive the dangers associated to such investments.
A extra excessive state of affairs is when the content material of the message means that much less advanced devices similar to shares are provided when in actual fact, choices or CFDs are bought.
One other instance is when an funding agency is paying an affiliate/finfluencer for promoting. Then the agency’s funding providers ought to make sure that the affiliate presents the corporations providers in a good and balanced method. A presentation the place the affiliate praises benefits of the agency’s providers solely with out giving a good and outstanding indication of any related dangers is in breach with the requirement that data is correct and all the time offers a good and outstanding indication of any related dangers when referencing any potential advantages of an funding service or monetary instrument.
The affiliate ought to, in any case, point out of their publication that it’s as an commercial.
ESMA is searching for stakeholders enter by 14 March 2024 on suggestions concerning on-line disclosures, digital instruments, and advertising and marketing practices.