• Deborah

Online and mobile trading platforms are transforming access to investment products. Retail investors have an increasing selection of convenient and easy-to-use investment services. They also are attracted to the growing offering of sustainable investment products in the market.


In this context, Natasha Cazenav, the Executive Director of the European Securities and Markets Authority (ESMA) in her speech held on September 17 , shared trends and considerations on the rising retail participation in the capital markets and the challenges for regulation.



Investment costs


Cazenav recognised the challenges that investment costs have on retail investors’ fund performances and emphasized the importance of making clear and comparable information available to investors on the role of costs to assess investment performance. Moreover, provisions in the UCITS framework set out the obligation of not charging investors undue costs. However, ESMA has identified a lack of consistency in the application of the notion of undue costs throughout the Union.

ESMA, Cazenav notes, is contributing to the upcoming strategy for retail investments, including ensuring investors receive clear, fair and adequate disclosures to make informed decisions.


In addition, she touched upon practices where no explicit commissions are charged on the client side but where firms receive payment from third parties. Such examples have arisen from the development of new distribution models and this topic of inducements potentially result in “biased advice and poor asset allocation”.


ESG disclosure


According to Cazenav, assets in Environmental, Social and Governance (ESG) products have increased by 20% in the first half of 2021. To support investor confidence in the market, Europe established the sustainable finance disclosure regulation (SFDR) from March 10, 2021. However, there are many challenges in ensuring transparency, ranging from different underlying documentation, lack of comparability across classification methods and complex language.


Overall, Cazenav addressed how ESMA and other organizations are adapting the regulatory framework to tackle the challenges related to ESG-disclosures to limit the risks of greenwashing.

Recent Posts

See All

22/09/2022 - Coming into force of certain requirements regarding the Québec’s Act respecting the protection of personal information in the private sector, introduced by Bill 64, including but limited