On 26 February 2021, the MiFID II “Quick” Fix Directive was published in response to the COVID-19 epidemic and associated disruptions. Member States are required to adopt implementing measures by 28 November 2021, and the application of the measures is expected by 28 February 2022.

The Quick Fix Directive makes, among others, the following amendments to MiFID II (list not exhaustive):

  • Phase-out of paper-based communication as a default.

The default method for firms to communicate with their clients will be switched from paper-based to electronic communication, although retail clients should be able to request the provision of communication on paper, if they prefer.

  • Exemption from ex ante costs and charges

There is a new exemption from the requirement to provide ex ante cost and charges disclosures with respect to agreements to buy or sell financial instruments concluded by means of distance communication. Where the exemption applies, investment firms will be able to provide cost and charges information without undue delay after the conclusion of the transaction if the client has consented to receiving the information after conclusion of the transaction and has been given the option of delaying the transaction until the client has received the information.

  • Temporary suspension of Best Execution Reports

The amendments provide for a temporary suspension of the requirement on trading venues, systematic internalisers and other execution venues to submit quarterly best execution reports under RTS 27. The suspension will apply until 27 February 2023.

  • Exemptions from product governance requirements

An investment firm shall be exempted from the requirements set out in the second to fifth subparagraphs of Article 16(3) and in Article 24(2):

  • where the investment service it provides relates to bonds with no other embedded derivative than a make-whole clause, or
  • where the financial instruments are marketed or distributed exclusively to eligible counterparties.
  • Costs and Charges disclosure

Services provided to professional clients and eligible counterparties should be exempted from the costs and charges disclosure requirement, except with regard to the services of investment advice and portfolio management.

  • Switching cost/benefit analysis

When providing either investment advice or portfolio management that involves the switching of financial instruments, investment firms shall obtain the necessary information on the client’s investment and shall analyse the costs and benefits of the switching of financial instruments. When providing investment advice, investment firms shall inform the client whether or not the benefits of the switching of financial instruments are greater than the costs involved in such switching.

Professional clients are exempted from above requirement; however, they retain the possibility to opt in.

  • Other reporting requirements to professional clients and eligible counterparties

In respect of professional clients, an opt-in system is going to apply. The starting point of this opt-in system is that investment firms are no longer required to comply with reporting requirements in respect of the services provided and the transactions undertaken on behalf of professional clients. If professional clients do want to receive these reports, they have to send an opt-in request (insertion of new article 29a(2) MiFID II).

In respect of eligible counterparties, reporting requirements are going to be completely deleted and there will be no opt-in system (amendment of article 30(1) MiFID II).

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