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1 – 10 of 38With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact…
Abstract
Purpose
With the introduction of the Markets in Financial Instruments Directive (MiFID), financial institutions are faced with many investor protection provisions; this has a major impact on the day-to-day operations of private banks, which provide investment services to predominately retail or non-professional investors. The purpose of this paper is to determine how MiFID provisions regarding investor protection with respect to suitability are complied with in practice by private banks.
Design/methodology/approach
Based on interviews with 25 representatives of private banks from 10 different European Union (EU) member states, the researchers have determined how these provisions are fulfilled and associated risks mitigated. Mapping out the suitability requirements of MiFID and comparing them with how these have been operationalised, we arrive at the question of whether this leads to a level playing field and investor protection by different private banks.
Findings
Although MiFID is trying to achieve a level playing field between the EU member states, this study shows that this has not been achieved in all areas. Investor protection requirements from MiFID are interpreted and operationalised differently. Although these differences are sometimes small, sometimes they are larger and affect the way the investor is served and suitability determined.
Originality/value
This research provides a unique insight into the way private banks in Europe have implemented the MiFID II requirements and gives insight into best practices. For the future, this research can serve as a prelude to in-depth follow-up research on the implementation of EU provisions.
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Artemisa Ntourou and Aineas Mallios
The purpose of this paper is to assess the latest directives of the European Parliament and the Council – MiFID II and MiFIR – on markets in financial instruments in response to…
Abstract
Purpose
The purpose of this paper is to assess the latest directives of the European Parliament and the Council – MiFID II and MiFIR – on markets in financial instruments in response to the growth of dark pools in European equity markets.
Design/methodology/approach
This paper examines the impact of the new regulatory packages on European equity markets by identifying areas where the legislation is effective and comparing these changes in EU legislation with US legislation on dark pools.
Findings
This paper find that the MiFID II and MiFIR directives, implemented by the European Securities and Markets Authority to address these concerns, have reduced information asymmetry between market participants, thereby increasing competition between regulated markets and alternative trading facilities.
Research limitations/implications
Increased competition can improve market quality, which has practical implications for financial market regulation and policy formulation.
Originality/value
These findings are novel in the existing literature on high frequency trading through dark pools. They improve the understanding of dark trading and its impact on competition and market efficiency. In addition, this research can assist policymakers in designing effective financial market regulation. The economic analysis of legislation also helps regulators assess the impact of new legal provisions on the functioning of capital markets.
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Abstract
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Andrea Lippi and Federica Poli
Inspired by the groundbreaking novel European regulations on financial investors’ profiling (MiFID II regulation and the ESMA 2022 Guidelines), this paper aims to establish which…
Abstract
Purpose
Inspired by the groundbreaking novel European regulations on financial investors’ profiling (MiFID II regulation and the ESMA 2022 Guidelines), this paper aims to establish which distinctive socio-demographic traits distinguish investors who declare a generalized interest in all three environmental (E), social (S), and governance (G) pillars and investors who express interest in just one individual pillar or a combination of two pillars.
Design/methodology/approach
Based on a unique dataset of 190 real-world retail investors, this paper aims to create a profile of three types of investor: those whose interest lies in just the environmental pillar, those interested in a combination of the environmental and social pillars, and those interested in all three E, S, and G pillars jointly. Moreover, we try to ascertain whether it is possible to observe statistically significant differences between the different types of investors.
Findings
The results obtained indicate that it is possible to profile investors who are environmentally-oriented and investors who are ESG-oriented. Notably, levels of financial literacy do not influence investor ESG attitudes.
Practical implications
The results obtained may have multifaceted implications for financial advisors, the banking and financial institution industry, and marketing strategists, as well as for further research.
Originality/value
The originality of this paper derives from the responses used in the analysis, which were collected from a sample of real-world retail investors who completed a mandatory MiFID-questionnaire, validated by the Italian Securities and Markets Supervisory Authority. Our paper thus represents a bridge between a theoretical approach and real-world practice.
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Antonella Francesca Cicchiello, Maria Cristina Pietronudo, Daniele Leone and Andrea Caporuscio
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries…
Abstract
Purpose
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries regulate equity crowdfunding market in order to incentive the investments and protect investors.
Design/methodology/approach
Based on a legal acts' analysis, we conduct a qualitative study comparing the crowdfunding regulation addressed to investors. In particular, we focus our analysis on the European countries with the highest concentration of crowdfunding platforms (i.e. the UK, Germany, France, Italy and Spain).
Findings
The results show that some countries, such as the UK, Germany and France, present an investor-oriented approach based on non-restrictive regulation, while other countries, such as Spain and Italy, have a restrictive approach that protects investors excessively and discourages them. In particular, the case study of France shows how the introduction of unrestricted regulation can produce positive effects on the volume of crowdfunding transactions.
Practical implications
The paper is addressed to investors, policymakers and intermediaries (platforms) to help the first in orienting themselves between the different crowdfunding regulations and the latter in aligning and orchestrating rules and norms.
Originality/value
This is the first study that analyses the role of investor-oriented regulations in the promotion of entrepreneurship through the identification of four key factors to monitor equity crowdfunding regulations.
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