MiFID

MiFID (Markets in Financial Instruments Directive) is the Directive 2004/39/EC of the European Parliament and Council on markets in financial instruments which came into force in Member States and states of the European Economic Area on November 1, 2007, replacing the previous ISD (Investment Services Directive) Directive. 

MiFID regulates the provision of financial services by Credit Institutions and Investment Firms. Its main objective is to enhance the single European financial marketplace, improve competition between the countries of the European Union and offer greater protection to investors. 

This new Directive has been incorporated to the Cyprus legislation through the Investment Services and Activities and Regulated Markets Law of 2007 (Law 144(I)/2007). 

To whom does MiFID apply? 

MiFID applies to the following providers of financial services: 

• • Investment Firms 

  • Regulated Markets 

  • Credit Institutions (Banks, Co-operative societies) 

What investment services & activities does MiFID cover? 

MiFID covers the following core investment services & activities: 

• • Reception & Transmission of orders 

  • Executions of Orders 

  • Dealing on own account 

  • Portfolio Management 

  • Investment advice 

  • Underwriting & placing with or without a firm commitment 

  • Operation of Multilateral Trading Facilities (MTF) 

What investment products is MiFID concerned with? 

MiFID is concerned with the following investment products: 

• • Transferable securities (stocks, bonds, rights, etc) 

  • Derivatives (options, futures, swaps, warrants etc) 

  • Mutual Funds 

  • Financial Contracts for Difference 

  • Derivative instruments for credit risk transfer 

What benefits do investors derive from MiFID? 

 Under MiFID investors enjoy greater transparency and protection. The most important benefits for an investor are: 

• Client categorization into three distinct categories, "eligible counterparties", professional clients or retail clients, with increasing levels of protection 

• Evaluation of suitability and appropriateness of the provision of financial services to investors, ensuring that: 

  • the financial risk of a service matches the investor’s financial position; and 

  • the complexity of a service matches the investor’s knowledge & experience 

• Best execution of orders; there are particular requirements on investment services firms to be able to prove that they have dealt in the best market and at the best terms for their clients 

• Better reporting: there are new requirements on how investment firms report on transactions and progress to their clients 

• Client order handling; there are specific requirements relating to the information that needs to be captured when accepting client orders, ensuring that a firm is acting in a client's best interests, and as to how orders from different clients may be aggregated 

• Pre-trade and Post-trade transparency; there are particular requirements on market operators and/or investment firms relating to the information that needs to be published pre- and post-trade 

• EU passport; EU-wide service from their investment services company on the basis of the regulations in force in their home country. 

How will MiFID affect Global Capital’s Clients? 

• Global Capital Securities and Financial Services Ltd has always aimed at offering its clients the highest standard of services and maximum protection. We are therefore very positive about MiFID’s requirements and are in full compliance with them. 

• Another positive aspect of MiFID is that the requirement to improve the information that we hold about our clients and their affairs, will help us develop more useful services and products for them, a capability which we intend to explore.