What financial instruments are included in MiFID II? (2024)

What financial instruments are included in MiFID II?

Understanding MiFID II

What are money market instruments under MiFID II?

those classes of financial instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers and excluding instruments of payment. [Note: article 4(1)(19) of MiFID]

What is the MiFID II Markets in Financial Instruments Directive?

The Markets in Financial Instruments Directive II (MiFID II) empowers the Commission to adopt delegated and implementing acts to specify how competent authorities and market participants shall comply with the obligations laid down in the directive.

Is a loan a MiFID financial instrument?

Loans are not subject to regulation under MiFID II. Generally speaking, the UK MiFID II does not change the scope of instruments that are considered to be financial instruments for the purposes of the UK regime. However, the scope of the UK regime may be subject to change.

Which firms does MiFID II apply to?

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.

Is commercial paper a MiFID instrument?

'Money-market instruments' under MiFID II mean those classes of instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers and excluding instruments of payment (Article 4(1)(17) MiFID II).

What is considered a money market instrument?

Money markets include markets for such instruments as bank accounts, including term certificates of deposit; interbank loans (loans between banks); money market mutual funds; commercial paper; Treasury bills; and securities lending and repurchase agreements (repos).

Is FX a MiFID instrument?

Foreign Exchange transactions and spot contracts under MiFID II. Foreign Exchange forwards are in scope for MiFID II. However, there is an exemption for spot contracts and for Foreign Exchange transactions that are used in order to facilitate payment for identifiable goods, services or direct investment.

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.

What is the difference between MiFID and MiFID II?

However, it was replaced by MiFID II on January 3, 2018, to further harmonise the rules for financial services firms with EU clients. Compared to MiFID I, MiFID II is a much wider-ranging legislation and has been characterised as one of the cornerstone pieces of the European financial services legislation.

What are examples of financial instruments?

Common examples of financial instruments include stocks, exchange-traded funds (ETFs), mutual funds, real estate investment trusts (REITs), bonds, derivatives contracts (such as options, futures, and swaps), checks, certificates of deposit (CDs), bank deposits, and loans.

Does MiFID apply to mortgages?

Under MiFID II commodity businesses, insurance brokers, mortgage brokers, estate agencies, corporate finance businesses, investment firms and any business who deals with products that have an investment element, will also need to comply with the new regulation.

What is not a financial instrument?

The following are examples of items that are not financial instruments: intangible assets, inventories, right-of-use assets, prepaid expenses, deferred revenue, warranty obligations (IAS 32. AG10-AG11), and gold (IFRS 9. B. 1).

How do you tell if a firm is a MiFID firm?

What is MiFID 2 in simple terms?

MiFID II sets out to: Ensure trading takes place on regulated platforms. Draw up rules on algorithmic and high-frequency trading. Increase transparency and oversight of financial markets and address shortcomings in commodity derivatives markets.

Does MiFID II apply to US firms?

The scope of MiFID II's territorial reach means that it will only apply directly to U.K. and EU-regulated investment firms.

Is repo a MiFID instrument?

While securities financing transactions (SFTs) are not in themselves MiFID instruments, they are nonetheless transactions in MiFID instruments and the working assumption is that SFTs, including repo and securities lending, are in scope of MiFID II and MiFIR, unless they are specifically excluded.

Is commercial paper a financial instrument?

Commercial paper is an unsecured, short-term debt instrument issued by corporations. It's typically used to finance short-term liabilities such as payroll, accounts payable, and inventories. Commercial paper is usually issued at a discount from face value.

What are transferable securities under MiFID?

The EU's Markets in Financial Instruments Directive (2014/65/EU) a.k.a. MiFID II defines transferable securities as securities that are negotiable on the capital market such as: (a) shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in ...

Are Treasury bonds money market instruments?

The correct answer is d.

Treasury bonds range in maturity from 10 to 30 years. This makes them capital market instruments.

Is money market a financial instrument?

Money market instruments are financial instruments which are issued with a maturity of one year or less. They provide a market for investors to earn a return on liquid assets; borrowers who need short-term liquidity have access to these funds; and they provide the Fed with a means to effect monetary policy.

Is a bond a money market instrument?

In reality, a bond is just one type of fixed income security. The difference between the money market and the bond market is that the money market specializes in very short-term debt securities (debt that matures in less than one year).

What is a financial instrument EU?

Financial instruments are a form of support where EU shared management funds are delivered via a structure through which financial products are provided to final recipients.

What are MiFID investments?

MiFID investment firms are authorised by the regulator in the Member State where the firm is. organised. On the basis of this authorisation and compliance with the local rules (which of course are. harmonised in each Member State by MiFID), the firm can conduct business on a cross-border.

Does MiFID II apply outside of EU?

Given the international reach and inter- connectedness of global financial markets, it comes as no surprise that the legislation's impact extends beyond the EU (including the EEA) to other regions, such as Asia-pacific and North America, where firms either provide or receive services from EU financial counterparties.