paul@paulfoleylaw.ie
22 Northumberland Road, Ballsbridge, Dublin 4

Expertise: MIFID II  in Ireland

THE ESSENCE OF MiFID II 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 II (excluding those concerning capital requirements and any requirements of the ESMA) comprises:

Directive 2014/65/EU on markets in financial instruments (MiFID II).

Regulation (EU) 600/2014 on markets in financial instruments (MiFIR).

Regulation (EU) 2016/1033 amending Regulation (EU) 600/2014, Regulation (EU) 596/2014 and Regulation (EU) 909/2014.

The main implementing regulations are:

S.I. No. 375 of 2017 European Union (Markets In Financial Instruments) Regulations 2017

S.I. No. 614 of 2017 European Union (Markets in Financial Instruments) (Amendment) Regulations 2017 and the Markets in Financial Instruments Act 2018

The Central Bank of Ireland is responsible for:

(i) the authorisation, prudential regulation and supervision of MiFID investment firms authorised in Ireland. (ii) the regulation and supervision of the conduct of business of MiFID firms authorised in Ireland and (iii) the supervision of the provisions of MiFID II relevant to the financial services market in Ireland.

MiFID 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 II, 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
  • advice on the different MiFID II services and MiFID ancillary services and how CRD III and CRD IV impact or relate to the different services
  • advice on completion of the MiFID II 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 II 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 II, providing legal advice related to the business plan, including on business continuity and outsourcing, etc
  • advice on what constitutes Investment Research, unbundling Investment Research from execution and the charging for and distribution of Investment Research
  • Passporting into the UK and Brexit
  • Securing access to RMs and MTFs and their facilities and services
  • CRD III and CRDIV, requirements that apply to investment firms including requirements on ICAAP
  • Data Reporting Services being, operating an approved reporting arrangement, operating a consolidated tape provider and operating an approved reporting mechanism
  • MiFID II and its application to Irish branches of EEA or third country firms and to collective investment scheme managers and custodians. How MiFID II will changes this.
  • Market Abuse Regulations and how to comply with them

MiFID services and ancillary services

The following Investment services and activities require authorisation under MiFID II

  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
  9. Operation of an OTF

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 II 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.

Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management and excluding maintaining securities accounts at the top tier level.

Granting credits or loans to an investor to allow him or her to carry out 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 related to underwriting.

Investment services and activities as well as ancillary services of the type included under Section A or B of Annex 1 related to the underlying of the derivatives included under paragraph 5, 6, 7 and 10 of Section C of Annex 1 where these are connected to the provision of investment or ancillary services.

MiFID Financial Instruments

  1. Transferable securities.
  2. Money-market instruments.
  3. Units in collective investment undertakings.
  4. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash.
  5. Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event.
  6. Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled.
  7. Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in paragraph 6 of this Part and not being for commercial purposes, which have the characteristics of other derivative financial instruments.
  8. Derivative instruments for the transfer of credit risk.
  9. Financial contracts for differences.
  10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Part, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, an OTF or an MTF.
  11. Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC.
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