Regulator MIFID


MiFID – The Markets in Financial Instruments Directive. It is probably the only one abbreviation in financial sector, which is not used in relation to the regulator as a legal entity, but but a document embodying the order of actions and interactions between all economic actors of the European space.

Development of provisions of the Directive were carried out under the guidance of the FSA (FCA – the regulator of the UK) and took several years. The work on the document started in 2004, and in 2007, the instrument came into force. Currently, MiFID requirements are mandatory for 27 EU countries and 3 EEA countries.

The purpose of MiFID: investor protection activities, the transparency of financial markets, improving the efficiency and competitiveness of financial markets. The Directive describes the provisions governing the financial instruments market, with the purpose of the maximum contribution to the introduction and expansion of investment services within the European space.

The following organizations fall under MFID regulations: dealing centers and brokers, investment, insurance funds, clearing corporations and organizations that provide consulting services.

The scope of MFID:

  • Stock, currency, commodity exchanges and other financial institutions;
  • carrying out various transactions with securities, derivatives, pre-trading agreement;
  • providing of the information to investors about the financial funds, instruments;
  • settlement of disputes, the solving of the issues related to claims to financial institutions and customers (investors) as well.

Examples of the requirements of MiFID:

  • presence and the usage of a sole MFID passport by the financial subject, that allows to наличие to equally provide services to all customers of the common economic space;
  • protection of personal data of the client, absolute confidentiality of client information, information about their assets, transactions;
  • assignment one of three possible statuses to customers: “a Full partner”, “Professional client” “Retail client”. The category assignment is conducted in accordance with the provided product to a customer and an appropriate degree of investor protection; ;
  • transparency of the actions, that allow investors, clients, auditors, regulatory institutions to aсquaint with eligibility and conditions of existent or future deals, within their powers and without the violation of Directive, at any time;
  • fully informing customers of possible risks in caused by transaction or work with the financial instrument;
  • provision of reports about already committed transaction;
  • saving the records of telephone conversations and correspondence with clients for 5 years, as well as their provision for regulatory bodies;
  • the company, which is registered outside the European Union can only act if an office in a country included in the corresponding economic area.

Thus, MiFID is a document, a set of rules and standards, provisions apart from national legislation guided by the subjects of EU financial markets. In the basis of its activities and of the Charter paragraphs MiFID took such regulators with a reputation like FCA, CySEC, BaFin.

Already in 2014, additional provision of MiFID II was introduced, that covers the following areas:

  • procedure for the registration and activities of investment companies (most of the clarifications concerned foreign companies);
  • development and implementation of new principles and ways of control (including technical equipment);
  • big detailing of the terms and conditions of derivatives trading and also trade on the secondary markets;
  • introduction of new trading systems (OTF), allowing to control the trading platform.

Taking into account, that exchange and OTC markets grow rapidly, and the volumes of transactions grow every day, perhaps, the world will soon see the new III directive.


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