Following the Listing Act Package, BETTER FINANCE strongly supports ESMA’s initiative to introduce an EU Code of Conduct (CoC) for issuer-sponsored research, developed under Article 24(3c) of MiFID II. The draft RTS is a long-awaited step toward standardising issuer-sponsored research, reinforcing investor protection, transparency, and research integrity across EU capital markets.
Introduced alongside other major reforms, including the re-bundling of research and execution costs, the CoC serves as a crucial safeguard against conflicts of interest. As issuer-sponsored research has expanded in response to declining independent research coverage, this framework must ensure it enhances market efficiency rather than becoming a selective promotional tool or restricting fair access to information. While supporting SME visibility is important, larger issuers must adhere to stronger transparency and disclosure requirements to prevent disproportionate market influence and uphold research objectivity.
ESMA’s CoC sets a vital regulatory baseline, but reinforced safeguards are essential to prevent issuers from exerting influence over research content, ensure equal investor access, and establish issuer-sponsored research as a reliable and independent source of financial information. Strengthening transparency, enforcement, and research objectivity is critical to maintaining market fairness, particularly for retail investors.
Key Areas for Improvement:
- Issuer transparency gaps: The lack of mandatory disclosure on research agreements and payments risks enabling issuers to selectively commission research without oversight.
- Fragmented enforcement: The CoC applies only to MiFID investment firms, leaving non-MiFID research providers outside direct regulatory supervision and raising concerns over regulatory arbitrage.
- Stronger research update requirements: Clearer obligations are needed to prevent outdated research from misleading investors, with explicit criteria for when updates are required.
- Equal access for all investors: The CoC should mandate ESAP inclusion for all issuer-sponsored research and also prevent selective or overly delayed distribution favouring institutional investors or paid agents.
While BETTER FINANCE welcomes ESMA’s initiative, reinforcing transparency, oversight, and accountability is crucial to ensuring issuer-sponsored research enhances market efficiency, fosters coverage and liquidity, and remains a trusted tool – aligned with market standards – rather than a vehicle for selective disclosure, hidden conflicts of interest, or undue issuer influence, particularly at the expense of retail investors.
⬇️Read and Download the Consultation Response ⬇️