ERDEM-NEWSLETTER-2018-metin

197 CAPITAL MARKETS LAW rule to apply: (i) third country investment firms must be authorized and be subject to effective supervision in their home country in respect of the provision of the relevant service; (ii) cooperation arrangements must have been entered into between the European Securities and the Markets Authority (“ESMA”) and the third country supervisory authority which, in particular, relate to coordination of supervisory activities and exchange of information; and (iii) the European Com- mission must have adopted an ‘equivalence decision’ upon the ESMA recommendation stating that the legal and supervisory arrangements of the third country ensure that its investment firms comply with legally binding prudential and business conduct requirements of equivalent effect to MiFID II. Member states may, however, require a branch to be established in their respective jurisdictions where firms are dealing with retail customers. In addition, these firms may be indirectly impacted in their dealings with business partners that are obliged to comply with the MiFID II. Investor Protection Independent Investment Advice and Ban of Inducements MiFID II draws distinction between the provision of investment advice on an independent basis, and the provision of investment advice on a non-independent basis. Where an investment firm informs the client that investment advice is provided on an independent basis, that investment firm shall assess a sufficient range of financial instruments available on the market that must be sufficiently diverse with regard to their type and issuers or product providers to ensure that the client’s investment objectives can be suitably met, and must not be limited to financial instruments issued or provided by: (i) the investment firm, itself, or by entities having close links with the investment firm; or (ii) other entities with which the investment firm has close legal or economic relationships, such as contractual relationships, so as to pose the a risk of impairing the independent basis of the advice provided, and not to accept and retain fees, commissions, or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of the service to clients. Minor non-monetary benefits that are capable of