Perpetual Misconceptions: Why Perpetual Futures Are Not MiFID-Compliant and Neither Is ESMA
Regulation must not pretend that blockchain assets can be made legally sound simply by naming them financial instruments.
This article demonstrates in the context of MiCA:
Legal Overreach Without Mandate: ESMA’s guidelines misinterpret their MiCA mandate by attempting to redefine core legal concepts—like what constitutes a financial instrument—without proper legislative authority. This violates the EU’s legal hierarchy, as only MiFID II and national law can determine such classifications.
Confusion Instead of Clarity: Far from harmonizing rules, ESMA’s guidance introduces legal uncertainty. Its vague, contradictory, and non-binding “criteria” force market actors and NCAs into subjective case-by-case assessments, undermining both investor protection and regulatory coherence.
Structural Misfit with Securities Law: Blockchain-based products like perpetual futures fundamentally lack the legal, technical, and economic features of regulated derivatives. ESMA’s attempt to classify them as such ignores settlement, enforceability, and ownership issues—and risks systemic misclassification and market instability and seems ignorant of such consequences.
The guidelines are also non-binding. But they failed to mentioned that.
MiCA, I wrote about this before: The Commission cites Article 114 TFEU as the legal basis.
The use of Article 114 TFEU as a legal basis cannot override fundamental components of Member State contract, property, or securities law. It does not permit the EU to redefine what constitutes legal control, transferability, or enforceability of contractual rights. Doing so would exceed the competence conferred by Article 114 and intrude on domestic legal domains that remain within national sovereignty. Any regulatory framework that attempts to assign legal effect to purely technical artefacts (e.g., tokens or wallet addresses) without reconciling them with existing private law obligations fails to comply with foundational limits of legislative authority.
So Article 114 cannot be used to alter or replace core areas of national law, such as:
Contract law
Property law
Securities ownership rules
National insolvency frameworks
These areas fall within the Member States' competence, and the Court of Justice of the EU (CJEU) has consistently ruled that harmonisation under Article 114 must respect the core principles of national legal systems, particularly in private law.
We cannot treat blockchain assets like traditional bearer instruments without asking:
What makes this legally enforceable?
What legal consequence flows from holding this token?
Who is the counterparty, and under what governing law?
In traditional finance, "redeemable for cash" = security, deposit, e-money, or contractual claim. Saying it is “just a token,” yet we still promise redemption is legally unsustainable.
I do not understand how ESMA reconciles the law with its Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments remains a mystery:
“These guidelines are issued under Article 16(1) of the ESMA Regulation and Article 2(5) of MiCA. The purpose of these guidelines is to specify conditions and criteria for determining whether a crypto-asset should qualify as a financial instrument and therefore ensuring the common, uniform and consistent application of the provisions in Article 2(4)(a) of MiCA.”
And its entirely pointless.
EU Regulatory Impact Assessment (2019):
“Even where a crypto-asset would qualify as a MiFID II financial instrument (the so-called ‘security tokens’), there is a lack of clarity on how the existing regulatory framework for financial services applies to such assets and services related to them. As the existing regulatory framework was not designed with crypto-assets in mind, NCAs face challenges in interpreting and applying the various requirements under EU law.”
NCA = National Competent Authority like BaFin etc. How can they not see the problem. Their Guidelines lack legal statute and even if they the had the competence to issue them, they would do more harm than good.
But they found. a problem
“EU Member States have not always interpreted and implemented the MiFID II Directive in a similar way. ESMA has found that while a majority of national competent authorities (NCAs) have no specific criteria in their national legislation to identify transferable securities in addition to those set out under MiFID II, other NCAs do have such criteria. This results in different interpretations of what constitutes a “transferable security.”
Very concerning. Let’s have a look.
“All Member States, except Poland. In addition, two EEA Member States (Liechtenstein and Norway). ESMA, Annex I – legal qualification of crypto-assets – survey to NCAs, January 2019.”
The different interpretation is Poland, and Liechtenstein. That is not evidence of market fragmentation. Sorry Poland, I am sure you are not big enough to singlehandedly fragment EU’s capital markets.
The cited “divergence” in Member State definitions of transferable securities, based on ESMA’s 2019 survey, is materially overstated. Even where Poland applies additional criteria, this has no impact on the recognition of securities issued under the laws of other Member States. For example, a German AG issuing bonds under German law will not be subject to Polish requirements, and Polish investors can freely acquire these securities under the MiFID II framework. The cross-border framework operates on recognition of the legal form and rights of the security, not on mutual definitional uniformity. Therefore, the problem identified is fictional and should not be used to justify regulatory intervention.
Still from EU Regulatory Impact Assessment (2019):
“However, ESMA advice [..] has showed limited support from NCAs to create a new category of financial instruments for crypto-assets, as the creation of a new category would create confusion and regulatory arbitrage between existing categories (e.g. traditional ‘transferable securities’) and the new one (e.g. investment tokens that present the same features as traditional transferable securities but issued on a DLT).”
‘Has showed’? Ok. Anyway, this sounds like a bit of a problem. But ESMA ignored it.
Any regulatory assumption that blockchain is a neutral or purely technological layer misrepresents its function. Blockchain rewires the architecture of financial instruments — replacing contractual interpretation with executable code, identity with pseudonymity, and legal discretion with automated logic. This is not an upgrade to traditional systems but a structural transformation. As such, blockchain-based financial instruments cannot be treated as equivalent simply by mirroring the form of traditional securities. The failure to grasp this distinction introduces serious legal risk and undermines the coherence of the existing framework.
EU Regulatory Impact Assessment (2019):
“EU regulation could require the artificial replication of the traditional steps of the lifecycle of a transaction (such as trading and post-trade activities) and doing so would erode most of the efficiency gains offered by the technology. In fact, it can be assumed that costs will be higher compared to traditional financial instruments given that it would constitute a novel approach (lack of economies of scale, specialist knowhow etc.). As such, the uptake of security tokens is largely dependent on adapting the regulatory requirements in a way that would allow service providers and market infrastructures using DLT to realise the efficiency gains.”
The EU’s Regulatory Impact Assessment is half-aware of the structural mismatch, but stops short of admitting that many blockchain-native tokens simply cannot comply with traditional financial regulation — not just because of cost, but because of fundamental incompatibility.
Compliance may not just be costly — it may be structurally impossible.
Blockchain doesn’t have ownership registers or account identifiers.
Tokens don’t carry legal rights unless linked to enforceable contracts — which blockchain alone cannot do.
You cannot have final settlement without intermediated payments — stablecoins aren't legal tender, and smart contracts can’t enforce legal obligations.
Requiring blockchain-based tokens to replicate the full lifecycle and control mechanisms of traditional securities may be structurally impossible, not merely costly. Many of the core assumptions of securities law — including identification, ownership, enforceable rights, and final settlement — are not supported by blockchain architecture and would require off-chain systems that render the blockchain record redundant. This is solvable but would require conceptual clarity about market design.
EU Regulatory Impact Assessment (2019):
“The definitions in EU law rely on notions in national law to define what constitutes a financial instrument. Member State legislation varies on this. If a crypto-asset qualifies as a financial instrument, then in principle, the corresponding EU legislation applies (MiFID, MAR, Prospectus...). Applying this legislation in practice to assets recorded, held and transacted on distributed ledgers and blockchains, presents a number of complex legal and practical questions as to how the legislation can actually be applied to them. This is largely due to the fact that distributed ledger implementation were not considered at the time the relevant legislation was adopted by the co-legislators.”
That is very correct. Whether an instrument is a “transferable security” is not a pure technical matter — it depends on:
What rights are “attached” (which are defined by national private law)
Whether those rights are enforceable or negotiable (again, under national law)
Whether there's legal clarity about who holds what, and how — something blockchain does not always make clear.
You can't harmonize 27 national systems — each with unique property, contract, and securities law — through ESMA high-level Guidelines (assuming their Guidelines which are not their Guidelines could have that effect) especially at quality it is.
Crypto-assets don’t need harmonisation under EU law unless we intend to bring them into regulated public market infrastructure — i.e. trading venues, CSDs, custodians, etc.
The moment you do that, MiFID II and the associated financial market rules apply automatically — not because the asset is “crypto,” but because it’s a financial instrument being traded publicly.
Once that happens, property law, custody, and insolvency law kick in — and those are national law domains. You can’t harmonise them from Brussels unless the treaties change.
Securities law is the result of decades (centuries, in some cases) of national doctrine, judicial interpretation, and layered statutory development — not something you can "plug into" blockchain overnight.
The moment you introduce a new asset class or format like crypto, you're entering property law, contract law, title transfer, secured interests, custody, and bankruptcy — none of which are harmonised across Member States.
We cannot afford to override this without thinking what is the best way to do that. That is a massive rethink. Would be fun though. This groups like UNIDROIT talk for 10 years and still debate but I have a lot of respect why this is not so simple and we can’t afford break the current system.
ESMA Guidelines (2024)
“11. The technological format of crypto-assets should not be considered a determining factor by national competent authorities and financial market participants when assessing the qualification as financial instruments. Following this, the process of tokenisation of financial should not affect the classification of such assets.”
That’s careless and directly contradicting what they said at the outset. If we force-fit DLT into the existing without thinking we will make everything costly and cumbersome. Obviously, ESMA lacks an explanation for its insight and different technology is what got everyone interested so how can this not matter.
ESMA Guidelines (2024)
“44. ESMA recognises the unique characteristics of certain crypto-native derivatives, such as perpetual futures. While these instruments may not have a direct equivalent in traditional finance, their economic functions can however be similar somehow to warrant classification as derivative contracts under MiFID II.”
Shocking. No ESMA they don’t warrant such a classification.
Let’’s think about securities vs. derivatives.
Not all historical debt instruments functioned as "bonds" in the modern sense. The tratta (or cambium) was not primarily a loan or bond; it was a financial instrument for international payment and settlement, often used by Italian merchant bankers in the late medieval and early Renaissance period.
The commercial bond that developed in England was highly regarded, and this stemmed from both its origin and formal structure. It was a type of "carta", a legal document — like a land charter, but used for debt and financial obligations. The form mattered: it used an open declaration, directly from the debtor, with phrases like:
"me Johannem teneri et firmiter obligari"
(“I, John, bind myself and firmly obligate myself…”)
This personal and public statement made in the first person gave it stronger legal force. It was open (‘patent’) — meaning available for public inspection or recognition — which made it legally weightierthan a notitia (a certificate written in the third person, more like a passive record). It contained a universal address (“noverint universi”): A kind of public proclamation — not just a bilateral contract, but a legal act made outwardly and universally.
In Roman law, particularly under the influence of the ius civile, the principle was that a person's formal declaration of intent could create a legal obligation, even without the need for an external enforcement mechanism or physical evidence.
Whether in Roman law, medieval bonds, or modern contract law, an obligation only exists if we can recognize the speaker and attribute the act to them.
Bitcoin's Design Was for a Specific Scenario
The Nakamoto whitepaper explicitly describes a system for peer-to-peer electronic cash, where:
Two identifiable people (physically or contextually) interact — e.g., you stand in a shop.
The payer knows the payee’s address and sends a fixed amount.
There’s no need for future proof of ownership, because the transaction is complete the moment it’s broadcast.
That use case works without identity on-chain, because identity is resolved off-chain at the point of transaction.
When the same transactional mechanism is used for:
Securities issuance (bonds, equity)
Custody (long-term safekeeping)
Proof of ownership (legal title or claim)
Redemption or legal rights (like bearer bonds)
...it collapses completely, because:
There is no on-chain proof of identity or authority.
There is no way to demonstrate control after-the-fact.
You cannot interpret the meaning of a token without understanding who sent it, why, and under what terms.
Every meaningful legal act (e.g., issuing a bond, transferring custody) must include:
A known actor with legal standing.
An intentional declaration.
A way to interpret and verify what happened.
Bitcoin only solves the finality of payment, not legal proof of entitlement.
That was a long explanation to get to this point where ESMA talks about “tokenised perpetual futures.” These instruments are contractual obligations recorded internally by the exchange. They are not embodied in transferable tokens on a blockchain, nor can they be legally transferred to third parties without the original contractual framework being renegotiated. As such, they are neither bearer instruments nor financial assets that can be "traded" independently of the counterparty agreement.
Moreover, even in decentralized protocols, tokenising perpetual futures introduces deep legal uncertainty. A perpetual future involves ongoing obligations (margin maintenance, funding payments, settlement conditions) that are inherently bilateral and dynamic. Reducing these to a token misrepresents the legal nature of the instrument and introduces risk, especially when holders believe they possess a claim that may, in fact, no longer exist or be enforceable.
Thus, referring to “tokenised perpetual futures” as if they were standardized, fungible financial instruments creates both a legal and operational mischaracterization.
Regarding derivatives (there are of course more)
Options are products where someone is granted the right to buy or sell something at a specified date in the future at a price fixed today.
Futures are products where someone agrees to buy or sell a product at a specified date in the future at a price fixed today.
ESMA again:
“Unlike traditional futures contracts, perpetual futures are designed to provide continuous exposure to the underlying asset without requiring periodic rollovers. Despite their unique structure, perpetual futures should be treated as derivative contracts as they involve an agreement between parties to exchange the performance of an underlying asset over time, and their value is derived from the price movements of that asset.”
That is financial incompetence.
ESMA, here’s an exam question for you:
Suppose we have a contract that needs to be priced today so I can buy it. Let’s say it’s an option to buy one Bitcoin, and the current price of 1 BTC is $100,000. What should the price be for a contract that allows me to buy 1 BTC at any point in time — from now until eternity?
And ESMA — as the exchange, you are responsible for pricing this instrument in a way that allows you to manage your risk, without raising concerns when your friends at the national competent authority come knocking to review your risk models.
So? What’s the price?
It’s impossible.
Hence why it’s nonsense to talk about continuous exposure. They expire daily and reset. They thus lack the ability to be used for risk management and cannot be equated with regulated derivatives. At all. We have a fixed date so that future risk can be priced and hedged if need be.
Futures contracts only exist within the infrastructure of the clearinghouse (CCP). The position is account-based, not a bearer asset, and cannot be extracted, tokenised, or transferred outside the CCP system.
You can’t structure perpetual crypto swaps as traditional derivatives under MiFID II, without regulatory reinterpretation — or new secondary legislation.
A derivative under MiFID II (e.g. option, future, swap):
Is tied to a maturity or expiry, enabling risk measurement over time.
Is standardized, allowing clearing and transparency.
Has a defined underlying and margin regime, enabling systemic oversight.
A perpetual swap:
Has no expiry, no maturity ladder.
Relies on a funding rate mechanism instead of settlement.
Is often non-cleared, crypto-margined, and off-exchange.
Creates open-ended exposure with indeterminate risk duration.
Perpetual Futures Are Structurally Unfit for Regulatory Derivative Classifications
Misclassification risk: Regulating perpetual futures as if they were traditional derivatives creates false assumptionsabout risk, margin, portability, and legal enforceability — a problem for market stability, investor protection, and systemic risk models.
No true position: Unlike standard futures or options:
Perpetuals don’t secure price advantage.
They reset exposure frequently, often every 8 hours.
You can’t "carry" a strategic position without continual re-pricing.
Lack of hedgeability: They cannot be used in a portfolio for hedging or capital efficiency — no fixed expiry, no guaranteed liquidity alignment with underlying assets.
Rent extraction mechanisms: Funding rates redistribute capital to liquidity providers or market makers in a non-transparent, non-prudentially regulated environment. It’s rent-seeking wrapped in a product.
Overcollateralization + under-hedging: Traders must overcollateralize for volatility without gaining offsetting capital efficiency, leading to more systemic exposure and less control.
They are not instruments. This has nothing to do with derivatives at all.
For more detail why perpetual swaps in DeFi are structurally incapable of supporting reliable pricing, hedging, or investment returns which makes them fundamentally uninvestable and unpriceable by traditional standards pls feel free to have a look here. I also explain the isomorphism between decentralised consensus and lawful order: both systems define legitimacy not by authority, but by behaviour. Specifically, by structural compliance with mutually agreed constraints.
“2. The guidelines are not intended to provide clarity on the broader concept of fungibility. Instead, the guidelines focus on the notion of uniqueness, a concept that is relatively new under MiCA. The distinction between uniqueness and non-fungibility is crucial in the context of NFTs, and the guidelines aim to clarify how such notion of uniqueness should be interpreted.”
Later in the document, they use "unique" and "non-fungible" interchangeably, especially when discussing whether an NFT qualifies for MiCA exclusion. They rely on characteristics like “fractionalised tokens might not be unique”, but then shift back to saying “unique = non-fungible” without clear criteria. What is this?
Fungibility is a legal and economic property: an asset is fungible if one unit is interchangeable with another of the same kind (e.g., euros, shares of the same class). This property is used to define what qualifies as a transferable security, financial instrument, or subject to certain market rules.
“An example of a token pertaining to a class is a scenario where tokens are interchangeable and grant holders equivalent voting rights and dividend entitlements. This interchangeability implies that each token is identical in rights and obligations for all holders. In such cases, national competent authorities and financial market participants may consider that these tokens meet the criteria for being part of a class.”
What is the purpose of this? Is ESMA now restating securities law. We also should keep in mind that investors may have a view on what exactly they accept as fungible. None of this can work in this abstract form. No bank will send dividends to an address without identification. Are we assuming these assets are held by custodian or is Frau Schmidt now trading peer-to-peer with Goldman. All very strange.
ESMA is also talking about “fungibility” and “transferability” in the wrong order and with unclear definitions. They imply technical form dictates legal classification, which is not how securities or financial instruments work under national or EU law. This is both misleading and legally fragile.
"Transferable" means that the holder of a legal right can instruct the transfer of that right to another person. This requires:
Legal authority over the asset.
A recognized process by which the transfer is executed (e.g., instruction to an intermediary, registration change, etc.).
Legal recognition that the recipient now has rights
The protocol doesn’t check who is legally entitled to transfer.
There is no linkage between control and right — if someone steals your key, the chain accepts their instruction as valid.
You cannot issue a legal transfer order. All you can do is broadcast a transaction to a decentralized network, and hope it works.
Claiming a cryptoasset is a "transferable security" just because it is sent on-chain completely ignores the difference between:
Factual control (who has the private key)
Legal right (who has the entitlement)
That gap is precisely where custody, securities law, and property law operate. ESMA just ignored it.
ESMA's assumption that technical restrictions such as whitelisting do not impact negotiability is fundamentally flawed. Declaring all on-chain assets as negotiable regardless of actual transferability renders custodianship unenforceable, strips away investor protections, and creates systemic legal ambiguity. This contradicts both existing financial market law and operational reality.
The consultation feedback clearly shows that multiple stakeholders objected to ESMA's overbroad interpretation of "negotiability" and "transferability" in the context of crypto-assets. Specifically, they argued:
Just because something can be sold theoretically doesn’t make it practically negotiable.
Legal, technical, or market limitations (e.g. whitelists, smart contract restrictions) may prevent true transferability.
Standardisation and interchangeability should matter — not just the hypothetical ability to transfer.
But ESMA’s response doesn’t really engage with that concern.
Instead, ESMA:
Reaffirms its position that "negotiability on capital markets" is a key MiFID II criterion and applies it to crypto-assets regardless of practical limitations.
Claims that negotiability includes concepts like standardisation and interchangeability — but does not define how these apply concretely in tokenised settings.
Argues that adding sub-criteria (as stakeholders requested) would cause complexity — effectively prioritising simplicity over legal accuracy.
ESMA reverses the logic. It assumes that:
If a token is negotiable → it is transferable → therefore, it can be a transferable security.
But in reality, transferability is a legal and technical condition, and negotiability is a market outcome — not the other way around.
By ignoring the practical, enforceable, and structural conditions of crypto-assets — and focusing solely on form — ESMA risks:
Misclassifying assets and overextending regulation.
Failing to recognise fundamental design differences between on-chain instruments and traditional securities.
Compromising legal enforceability by assuming market-like features where none exist.
In short: ESMA’s approach emphasizes formalistic consistency over functional coherence — and the feedback loop with stakeholders appears broken.
“5 It is important to note that, under the MiCA mandate, ESMA is not expected to clarify the entire scope of what constitutes a financial instrument, but only products that fall within both, the crypto-asset definition of MiCA and the financial instrument definition of MiFID II.”
“55. The guidelines already emphasise that crypto-assets cannot be simultaneously classified under both frameworks. If a crypto-asset meets the criteria for classification as a financial instrument, it will be subject to MiFID II, not MiCA”
Yet, much of the Final Report does exactly that — ESMA stretches the interpretation of “financial instruments” to include:
Tokenised perpetual futures
Crypto-assets with "potential" to be traded
Non-standardised or partially restricted tokens
These go beyond ESMA’s mandate under MiCA and into interpreting MiFID II, which only the co-legislators and/or the ECJ can do.
MiCA is subordinate, not equal, to MiFID II
MiFID II is part of the existing primary EU financial law framework (Level 1 legislation).
MiCA, while comprehensive, was introduced to cover gaps, not to rewrite or reinterpret MiFID.
Legal hierarchy (simplified):
MiFID II → Governs financial instruments and market infrastructure
MiCA → Applies only to crypto-assets not covered by MiFID II
ESMA Guidelines under MiCA → Must respect this boundary
MiFID II defines a financial instrument like a derivative as a contractual obligation that must be settled at a future date, typically involving cash or delivery of an underlying. But ESMA’s position in para 55 says:
"The method of settlement — whether in cash or through any crypto-assets — does not fundamentally alter the classification of the product if all other characteristics of a derivative are present."
ESMA is, in effect, asserting regulatory authority to redefine core legal terms (like “transferable security” or “derivative”) without a proper legal mandate from MiCA, MiFID II, or the co-legislators. This approach risks invalidating the guidelines if challenged in court or ignored by national regulators — especially where national law relies on strict interpretations of MiFID II.
You Cannot Accidentally Issue a Financial Instrument
“A digital representation of value or a right” — MiCA Art. 3(5) A right is whatever not rights reserved for financial instruments.
That definition is technologically descriptive, not legally determinative.
You do not become a share or bond issuer by writing code or issuing tokens.
MiFID financial instruments are defined by intentional legal rights and claims, not just transferability or trading capability.‘crypto-asset’ means a digital representation of a value or of a right.
A share, bond, or other financial instrument must be declared as such
The issuer must provide clear disclosure, register where necessary, and comply with national corporate law (e.g., shareholder registers, rights, voting, dividends)
If a project fails to declare a token as a security, but then:
Markets it as equity-like
Offers rights typically associated with securities
Sells it to retail/institutional investors
Then it does not become a security by virtue of facts. It becomes a potentially void instrument and the offeror may be liable for:
Breach of securities law
Misrepresentation
Fraudulent inducement under civil or criminal law
The Offeror Is Responsible for determination— But Is Always Subordinate to the Law MiFID and national company law establish that:
The issuer (offeror) must structure their instrument in accordance with the legal form they want (equity, debt, derivative, etc.)
The national competent authority (NCA) has oversight and can override the issuer’s classification if it violates the law
ESMA admits this to justify not issuing strict standards, instead offering vague “abstract example”. This is pointless
There Is No “Harmonisation Issue”
If a token is a financial instrument, then MiFID II and national securities law apply, full stop.
MiCA does not apply. There is no gap, no harmonisation problem. The only “issue” is:
Projects issue ambiguous tokens
Hope to avoid regulation
Then try to claim compliance later based on “interpretation”
ESMA should have realised the guideline should have said it is outside MiCA’s scope.
ESMA’s Guidelines Are Not Only Ineffective, They are Unlawful and Extremely Disruptive
By issuing:
A non-binding guideline
With no enforcement authority
Based on a limited MiCA mandate that excludes true financial instruments
ESMA undermines its own credibility.
These are not harmonisation measures. They are incompetent meddling.
These “Guidelines” Are Not Legally Binding – and ESMA Knows It (I assume but who knows)
According to Article 16(3) of the ESMA Regulation:
“Financial market participants shall make every effort to comply with those guidelines and recommendations.”
But that only applies when ESMA requires reporting compliance.
In this case:
ESMA explicitly did NOT require reporting from market participants. This means nobody is required to follow these guidelines.
They are legally non-mandatory and can be lawfully ignored.
MiFID Is the Sole Authority on What Constitutes a Financial Instrument
Per the MiCA Regulation, Article 2(4)(a):
MiCA does not apply to “crypto-assets that qualify as financial instruments”.
This means:
If a crypto-asset is a financial instrument, MiCA is excluded.
The determination of whether an asset is a financial instrument is governed exclusively by MiFID II, not MiCA.
ESMA has no authority under MiCA to redefine or test this status — it’s an interpretive overreach.
Only MiFID II and national company law determine whether something is a financial instrument. MiCA cannot expand this — and ESMA cannot redefine it.
Case-by-case Guidance That Tells You to Decide Case-by-case Is Not a “Guideline”
A regulatory guideline is meant to:
Add clarity
Reduce discretion
Harmonize practice
ESMA’s document instead repeatedly says:
“A case-by-case assessment is necessary” and
“These examples are illustrative only”This amounts to:
No real legal test
No harmonisation
No regulatory certainty
Yet ESMA claims the guidelines reduce fragmentation. This is formally false under any honest reading of the Regulation (EU) No 1095/2010.
This episode of drafting “guidelines” fail the standard of proportionality and utility required by Article 16(2) of the ESMA Regulation. It’s grotesque by any standard.