Inducements
A ban on inducements applies in the Netherlands for investment firms that provide investment services to retail investors. Under MiFID II, inducement rules also apply to services provided to professional investors.
Provision of a service to retail investors
A ban on inducements applies in the Netherlands for investment firms that provide investment services or ancillary services to retail investors. In summary, this means that investment firms may not receive or provide any monetary or non-monetary inducements in relation to the provision of an investment or ancillary service. This ban on inducements also applies to foreign investment firms with a branch office in the Netherlands and to Undertakings for Collective Investment in Transferable Securities (UCITS) as well as their management companies and Alternative Investment Funds (AIFs), when providing investment services to retail investors.
Provision of a service to professional investors
A ban on inducements also applies in the case of individual portfolio management and independent advice provided to professional investors. Requirements regarding paying and receiving inducements also apply to other forms of services provided to professional investors. For instance, the inducements must enhance the quality of the service and they may not harm the client's interest.
Conditions for research
In addition, under MiFID II strict conditions apply to receiving research. Research qualifies, in principle, as an inducement unless the investment firm pays for the research. When research is qualified as an inducement, this means that the research may not be received if the ban on inducements applies. If this ban does not apply (for example, when non-independent advice is provided to a professional investor, see above), stricter requirements for paying for and receiving research apply.
The investment firm can pay for the research from its own funds; however, it may also charge the research to its clients. If the investment firm chooses to have its clients pay for the research, it can do this in two ways: charge the costs of the research directly to the client (via a separate invoice), or charge this by means of a surcharge on the transaction costs. Strict requirements apply to the last option. For instance, the amount that is charged for research must be based on the budget that the company has determined for this. Moreover, the amount may never depend on the transaction volume and/or the value of the executed transactions.
Rules dependent on type of services provided
Precisely which rules apply with regard to inducements and research depends on the type of services that an investment firm offers and the type of customer that is served. Further information can be found by using the following links:
• ESMA Q&As, including on research (Chapter 7) and inducements (Chapter 12)