The Markets in Financial Instruments Directive (MiFID) replaced the European Investment Services Directive (ISD).
MiFID makes changes to the regulatory framework to reflect developments in financial services and markets since the ISD was implemented.
In particular, MiFID expands the types of business that must be regulated in Ireland to include activities relating to a wider range of commodity and other non-financial derivatives.
MiFID also introduces the concept of a harmonised set of rules across the EU, governing the organisation of the business of an investment firm necessary to obtain an authorisation, and rules governing the conduct of an investment firm’s investment business activities.
In addition, some of the MiFID requirements are also relevant to credit institutions providing investment services or performing investment business activities.
Regulation for MIFID firms
The Financial regulatory body is responsible for:
- the prudential regulation and supervision of MiFID Investment Firms authorised in each country
- the regulation and supervision of the conduct of business of MiFID firms authorised
- the regulation and supervision of those provisions of the MiFID relevant to the financial services market
Passporting In / Out for MiFID Firms
MiFID sets out the principles of a single authorisation for firms and this provides that a MiFID Investment Firm may provide the services or perform the activities, for which it is authorised in one country, throughout the EC, either through the establishment of a branch or the free provision of services on a cross border basis (i.e. without establishing a permanent presence). In this regard, all European Regulatory Authorities uphold practical co-operation for the purpose of facilitating the passport notification process for MiFID Investment Firms.
A MiFID Investment Firm wishing to establish a branch in another Member State must communicate certain information to the Financial authority that includes a ‘programme of operations’ setting out, amongst other things, the investment services and/or activities to be offered and the organisational structure of the branch. Where the financial authority is satisfied with the information provided, the notification must be transmitted to the Regulatory Authority of the other Member State within three months of its receipt.
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