The Markets in Financial Instruments Directive ("MiFID")

Since 1^st of November 2007, all EU Member States have been required to give effect to the controversial Markets in Financial Instruments Directive and its supplementary level 2 directive and regulation (MiFID for short) in their national legislation.

The scope of MiFID is wider than the Investment Services Directive (ISD) which it replaces. In general terms, it harmonises the authorisation requirements and on ongoing supervisory/regulatory requirements for companies providing investment services (including providing investment advice) or performing investment activities, operating a regulated markets (RM) such as a stock exchange or operating multilateral trading facility (MTF).

Investment firms subject to MiFID regulation are also subject to a revised Capital Adequacy Directive ("CRD"). Likewise credit institutions subject to MiFID regulation must also comply with a similar directive that applies to credit institutions. The level of capital (both initial and ongoing capital cover) an investment firm subject to MiFID requires, is determined by the type of investment services and activities it provides or performs, its scope of authorisation and any limitations or requirements attaching to that authorisation.

Who is likely to be affected by MiFID?

Broadly speaking the types of firms likely to fall within the scope of MiFID scope are (i) retail banks (ii) investment banks, (iii) financial advisers unless they come within an available exemption; portfolio managers, (v) stockbrokers and broker dealers (vi) many futures and options firms, (vii) corporate finance firms (viii) wholesale market brokers (ix) operators of regulated markets ("RMs") and operators of MTFs (x) providers of custody services and (xi) some commodities and venture capital firms.

MiFID compliance is the responsibility of senior management

MiFID requires that senior management is responsible for their firm's compliance with MiFID and must receive on a frequent basis, and at least annually, written reports on the matters covered by articles 6 (Compliance), 7 (Risk Management) and 8 (Internal audit) of the level 2 directive, indicating in particular whether the appropriate remedial measures have been taken in the event of any deficiencies.

Companies affected by MiFID — Where we advise

Whether your service, activity or provision of advice is regulated by MiFID or whether you can avail of a MiFID exemption
Whether a particular financial instrument is within MiFID and whether it is a complex or non complex financial instrument
Compliance with organisational systems and controls, including safeguarding of client assets and client monies, records keeping requirements, business continuity, outsourcing, conflicts of interest, investment research and inducements
Conduct of Business regulation, including client categorisation rules, the regulation of systematic internalisers, know your client requirements ( investment advice and discretionary portfolio management, execution of complex and non complex financial instruments ( and their differing regulatory treatment ), other investment services or activities), best execution, client order handling and limit order regulation, tied agents, marketing (including marketing of investment products and services using the internet)
Reporting requirements, including pre and post trade transparency, reporting to clients and reporting to the regulator
Passporting into Ireland — legal issues
Securing access to RMs and MTFs and their facilities and services
Drafting terms of business, execution policy and conflicts of interest policy
Advising on investment management agreements and custody agreements
Advising on the CRD requirements that apply to investment firms
MiFID and its application to Irish branches of third country firms and to collective investment scheme managers and custodians

Investors — Where we advise

We advise investors of their legal rights and obligations when buying investment services and investment advice.

Contact Paul Foley or Gerry Walsh

Legal Notice & Disclaimer

McKeever Rowan Solicitors in Dublin, Ireland - Law Firm in the IFSC

The Markets in Financial Instruments Directive ("MiFID")

Who is likely to be affected by MiFID?

MiFID compliance is the responsibility of senior management

Companies affected by MiFID — Where we advise

Investors — Where we advise

Practice Areas

Corporate/Commercial

Litigation

Property and Private Client