What does MiFID mean in finance?
The Bottom Line. MiFID, or the Markets in Financial Instruments Directive, was a set of European regulations governing equities markets in the European Union. It was intended to enhance transparency and reporting requirements to protect European investors.
What is an example of a MiFID business?
A MiFID firm is one that is: An investment firm with its head office in the UK; or. A CRD credit firm providing investment services; or. A collective portfolio management investment firm.
What is the MiFID rule?
MiFID requires investment firms to provide various information to clients and potential clients. This includes information relating to the status of the firm, the key terms that will apply to the business that is undertaken, and the costs and charges that the client may incur.
Does MiFID apply to us?
If you are a non-UK firm, for example the UK branch of a US firm, MiFID does not apply to you. However, if MiFID would have applied to you if you had been incorporated or formed in the United Kingdom, you will be a third country investment firm under the FCA's rules.
What are the three categories of MiFID?
The MiFID II client categorisation is a framework that classifies clients of investment firms into three categories: eligible counterparties, professional clients, and retail clients.
How do you tell if a firm is a MiFID firm?
118(1) (in summary) 132a firm to which MiFID would apply if it had its head office or registered office in the EEA132 including, for some purposes only, a credit institution and collective portfolio management investment firm.
What is MiFID II in simple terms?
The MiFID II reform means that organised trading of financial instruments must shift to multilateral and regulated trading platforms or be subject to transparency requirements where traded over-the-counter (OTC).
Who is exempt from MiFID?
Generally speaking, collective investment undertakings are specifically exempt, as are their depositaries and managers. For collective investment undertakings within the scope of the UCITS Directive or AIFMD the "manager" corresponds to the management company or AIFM of the undertaking.
Who has to comply with MiFID?
MiFID II governs the provision of investment services in financial instruments. It applies to investment firms, wealth managers, broker dealers, product manufacturers and credit institutions authorised to carry out MiFID activities.
WHO issues MiFID?
MiFID II | European Securities and Markets Authority.
Who are MiFID clients?
Client Classifications Under the MiFID
There are three client types: professional clients, retail clients, and eligible counterparties. The goal for the classifications is that the regulatory protection for the clients should reflect the different levels of risks for each client type.
Who does MiFID reporting?
Who has to report transactions? Under MiFID II/MiFIR, operators of all trading venues (including Multilateral Trading Facilities, MTFs, and Organised Trading Facilities, OTFs) must report transactions traded on their platform when executed through their systems by a firm which is not subject to the regulation.
How do I become MiFID compliant?
MiFID compliance requires firms to capture all communications surrounding transactions, including email, telephone calls, social media and in-person meetings.
What transactions are reportable under MiFID?
Securities financial transactions (e.g., stock lending, repurchase agreements). Post-trade assignments and novations in derivatives. Portfolio compressions.
Who are professional investors under MiFID?
A Professional Client under MIFID II generally covers professionals in the finance industry, large corporate undertakings, government bodies and those that are eligible to elect to be considered a Professional Client.
What is the difference between GDPR and MiFID?
MiFID II requires the collection and retention of a large volume of client and counterparty information, including all electronic communications data. This data must be made available to regulators within 72 hours of a request. Conversely, GDPR introduces specific data subject rights around the erasure of data.
Are US firms subject to MiFID II?
Execution costs are then separately regulated by “best execution” rules. The scope of MiFID II's territorial reach means that it will only apply directly to U.K. and EU-regulated investment firms.
What products does MiFID apply to?
The regulations extend MiFID's earlier requirements to more financial instruments. Equities, commodities, debt instruments, futures and options, exchange-traded funds, and currencies all fall under its purview.
Does MiFID apply to private equity?
Although the majority of private equity managers are not MiFID entities, the MiFID framework also has implications for the whole private equity industry, given its wide scope and the extent to which other pieces of legislation – including the AIFMD – cross-reference its provisions.
Who created MiFID?
| European Union directive | |
| Title | Directive on markets in financial instruments |
| Made by | European Parliament and Council |
| Made under | Article 53(1) TFEU |
| History | |
|---|---|
Why was MiFID created?
The primary goal of MiFID II is to keep financial markets strong, fair, effective, and transparent.
What is the importance of MiFID?
MiFID's primary focus is to enhance investor protection and promote the fair and smooth functioning of the markets by setting out standards for financial instruments, trading venues, and investment firms.
What is the main business test for MiFID?
The purpose of main business test (MBT) under the MiFID II ancillary activity exemption is to determine whether the persons within the group trade on own account or provide investment services in commodity derivatives, emission allowances or derivatives thereof to such a large extent relative to the main business of ...
Is a pension a MiFID product?
MiFID II has introduced a new requirement for you to be provided with a quarterly valuation of your investment product. Pensions (including SIPPs) are excluded from this requirement and we will continue to issue you with an annual pension valuation on the anniversary of the start of your plan.
What is the MiFID override?
Within financial services regulations, the MiFID override meant that if a piece of domestic legislation clashed with MiFID / MiFID II, then it was deemed to be disregarded.
