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Markets in Financial Instruments Directive


THE ESSENCE of MiFID I and indeed also the MiFID II proposals is the regulation of the provision of investment services or the undertaking of investment activities on financial instruments.

MiFID I and MiFID II in Ireland

MiFID I comprises two directives, Directive 2004/39, Commission Directive 2006/73, and Commission Regulation No 1287/2006. In Ireland MiFID 1 Directives have been implemented by the European Communities (Markets in Financial Instruments Directive) Regulations 2007 as amended and supplemented by later legislation.

The essence of MiFID I and indeed also the MiFID II proposals (likely to be agreed later this year) is the regulation of the provision of investment services or the undertaking of investment activities (such as the operation of a multilateral trading facility (MTF) on financial instruments.

MiFID I and II – where we advise

  • for existing MiFID firms, the impact of MiFID II
  • whether your service, activity or provision of advice is regulated by MiFID, the IIA or whether you can avail of a MiFID exemption
  • advice on fitness and probity requirements as set out in the Central Bank Reform Act 2010 as amended and the fitness and probity standards. We can provide a compliance manual covering the requirements of the Central Bank on fitness and probity
  • advice on the different MiFID services and MiFID ancillary services and how CRD I, II and III impact or relate to the different services
  • advice on completion of the MiFID authorization application (including hybrid applications where IIA investment business instruments are sought to be included), and the constituent documents, required, including structuring the company, providing a MiFID Compliance Manual (which includes requirements on Money Laundering compliance), drafting the terms of business or investment management agreement as required, providing assistance on the conflicts of interest policy, providing undertakings for employees related to compliance with MiFID, providing legal advice related to the business plan, including on business continuity and outsourcing, etc
  • Passporting into the UK
  • Securing access to RMs and MTFs and their facilities and services
  • CRD I, II and III requirements that apply to investment firms including requirements on ICAAP
  • MiFID and its application to Irish branches of EEA or third country firms and to collective investment scheme managers and custodians. How MiFID II will change this.
  • Market Abuse Regulations and how to comply with them
  • Short Selling Regulations and how they impact the firm

MiFID services and ancillary services

The following services require authorisation under the MiFID Regulations:

  1. the reception and transmission of orders in relation to one or more financial instruments
  2. the execution of orders on behalf of clients
  3. dealing on own account, being the activity of trading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments
  4. Portfolio management
  5. Investment advice
  6. Underwriting of financial instruments or placing of financial instruments on a firm commitment basis
  7. Placing of financial instruments without a firm commitment basis
  8. Operation of multilateral trading facilities

Authorisation for certain ancillary services can additionally be provided as part of investment services, where so authorised by the Central Bank as part of a MiFID Authorisation:

Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management, granting credits or loans to an investor to allow the investor to execute a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction, advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings, foreign exchange services where these are connected to the provision of investment services, investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments, services relating to underwriting, investment services and certain other specified ancillary services.

MiFID II currently proposes that custody services will become a MiFID service requiring authorisation and will no longer be classified as an ancillary service.

MiFID Financial Instruments

Financial instruments include

  1. transferrable securities
  2. money market instruments
  3. units in or shares in undertakings for collective investments in transferable securities
  4. units in a unit trust
  5. shares in an investment company
  6. capital contributions to an investment limited partnership)
  7. units in a common contractual fund
  8. options, futures, swaps, forward rate agreements and a range of different derivative contracts as set out in the MiFID Regulations, and
  9. financial contracts for differences (CFDs).

A forward foreign exchange contract is not a financial instrument unless:

  • its terms are determined principally by reference to standard or regularly published economic terms, such as price, lot and delivery date,
  • it is traded, or is expressly stated to be equivalent to a contract that is traded, on a regulated market, an MTF or a third country trading facility that performs a similar function, and
  • it is cleared or settled through a recognised clearing house or is subject to regular margin calls. However, the provision of services in relation to forward foreign exchange contracts that are not financial instruments may be an ancillary service where these are connected to the provision of investment services.

MiFID II will (based on current proposals) add emission allowances to the list of financial instruments regulated by MiFID and also structured finance products where sold by credit institutions.


Robert Browne

Robert advises extensively on all aspects of Banking and Commercial Litigation, Injunctions, Financial Services and Insurance, Corporate and Private Client Litigation.
+353 1 859 0100

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