Pan European financial regulatory oversight body European Securities and Markets Authority (ESMA) has published a supervisory briefing on firms offering copy trading services, in accordance with its objective of fostering investor protection and actively promoting supervisory convergence across the EU.
What is Copy Trading?
Copy trading refers to a service that involves trading of a client’s assets based on the trades of another trader (hence adding a social element), whom ESMA refers to as the ‘copied trader’ (also identified as the ‘signal provider’). The trading usually is automated in this case, but it could also involve (partially) manual trading of the client’s assets.
ESMA Copy Trading Guideline Details
The ESMA briefing (see link to the full briefing below) includes guidance on the qualification of copy trading services as an investment service, and sets out supervisory expectations with regard to MiFID II requirements…
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