Spain: CNMV intensifies management on monetary companies advertising and marketing on social media

In letter

On October 24, 2022, the National Securities Market Commission (CNMV) issued a communication regarding investment recommendations made by influencers on social media. If such influencers are recognized as ‘experts’ under EU standards, they will be contacted by the CNMV and be made to comply with applicable regulations established under the framework of Regulation (EU) 596/2014 on market abuse and its Delegated Regulation (EU) 2016/958.

Investment recommendations on social media

Investment recommendations made on social media platforms will require influencers to identify themselves and their sources properly, and to make recommendations in an objective and transparent way, disclosing any affiliations or conflicts of interest that they may have.

The CNMV defines an ‘investment recommendation’ as any information recommending or suggesting an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuers, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public. The CNMV will analyze the nature of the information circulated, rather than its form, in order to assess whether it falls under the concept of a recommendation. A recommendation will be deemed as such even if it is not made in writing and regardless of its name or the terms employed to describe it.

Depending on the scope of their communications, influencers will need to comply with all additional applicable regulations when holding themselves out to the public as experienced and knowledgeable whether on the market, financial instruments or issuers, and when they are viewed as such by market participants.

This measure comes after the European Securities and Market Authority (ESMA) issued a statement last year on the topic of recommendations made through social media.

Institutionalized efforts to prevent the dissemination of unauthorized information

The CNMV measure is inserted into the framework adopted to prevent the dissemination of information on financial instruments by unauthorized entities.

In this context, the enactment of a (yet to be approved) bill will formally impose requirements on internet search engines to (i) check beforehand if the entity/person is authorized to provide financial services in order to flag them as a remunerated advertisement and (ii) to check whether they are included in the CNMV’s list of unauthorized providers of financial services.

Although these measures are not in force yet, some internet public engines have already announced they will apply a stricter policy and control of entities willing to advertise financial instruments or services on their platforms.

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