The European Securities and Markets Authority (ESMA) presented its 2023 report, which examines rules and sanctions applied in various sectors such as investment fund management, securities markets, and derivatives trading. In this review, we highlight what, in our opinion, shows trends in analyzing sanctions under the MiFID II and MiFIR legislation.
1. Sanctions Statistics by EU Countries
In 2023, EU countries applied 289 administrative sanctions and measures related to MiFID II and MiFIR violations. The highest number of sanctions was in Denmark (42), followed by Cyprus (38) and Bulgaria (30).
2. Administrative Fines and Their Amount
The total amount of fines imposed during the year reached €18,258,028. Notably, the largest fine of €7,760,000 was imposed in Iceland due to violations of conflict of interest and investor protection principles.
About a third of administrative measures (92 out of 289) were related to violations of organizational requirements under Article 16 of MiFID II.
Thus, the large amounts of fines and significant violations related to conflicts of interest and breaches of investor protection principles, as well as frequent violations of organizational requirements, indicate the need to strengthen control in this area. This is also a clear signal to participants in the financial sector that it is necessary to carefully review and ensure that the requirements applied in their organizations fully comply with the standards set by legislation. Besides the sanctions established by ESMA, some EU countries, such as Italy and Poland, additionally apply criminal sanctions (fines) under national law. In 2023, these countries imposed 37 criminal sanctions, with a total amount of €287,608.
3. The Case of Ireland
Since 2018, no sanctions under MiFID II have been imposed in Ireland, despite the presence of medium-sized investment markets in the country. However, it is a key participant considering the number of financial instruments available for trading (especially equities and ETFs).
It is believed that such results are due to the effective alignment of regulation and supervision in Ireland, where a strict regulatory system and preventive compliance practices ensure that financial market participants operate according to the guidelines set by legislation. This symbiosis between strict supervision and business objectives focused on compliance with legal requirements allows achieving excellent results, which are based not on the principle of "punishment" but on effective and coordinated market supervision.
What Does This Part of the Report Tell Us?
The statistics presented by ESMA show significant trends in the application of sanctions under MiFID II and MiFIR, emphasizing the need to strengthen control in areas related to organizational requirements and investor protection.
However, the case of Ireland also shows that effective alignment of regulation and supervision can help avoid violations and ensure market stability, which should be the primary goal of the supervisory system.
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