The EACB is pleased to respond to the European Securities and Markets Authority (ESMA) Call for Evidence on the retail investor journey. In particular, we support ESMA’s focus on making retail investing more accessible and reducing unnecessary complexity in the regulatory framework.
Our response highlights with concrete examples and data how excessive bureaucracy can discourage retail clients from engaging in capital markets. In particular, we emphasise that:
• The lack of financial education and risk aversion remain major barriers to retail investment. The promotion of financial education through national initiatives should be actively pursued.
• Regulatory complexity and information overload act as strong deterrents for retail investors. Regulatory requirements should be streamlined to simplify the investment journey and associated documentation — for example, by reducing explanatory material and deleting or introducing opt-out options for obligations such as call recording and the collection of income or asset information.
• Improved coordination and coherence across regulatory initiatives (e.g. MiFID, Green MiFID, EU Taxonomy, SFDR) is essential. Current sustainability preference requirements are overly complex and technical, often discouraging retail investors. These should be simplified. The upcoming review of the SFDR offers a timely opportunity to ensure alignment with MiFID.
• A supportive regulatory and tax environment for both investors and the financial sector is an essential step to stimulate investor interest and build trust
The EACB believes that avoiding new layers of bureaucracy and revising current rules are crucial steps to encourage greater retail participation in EU capital markets. Against this background, we urge a broader and more ambitious simplification of existing MiFID and PRIIPs frameworks.
For more information, you can access our full response.