The Markets in Financial Instruments Directive (MiFID)
came into effect on 01 November 2007, when it replaced the
Investment Services Directive (ISD). MiFID extends the coverage of
the ISD and introduces new and more extensive requirements that firms
will have to comply with, in particular for their conduct of business and internal
organisation.
MiFID has been implemented in Gibraltar via the
Financial Services (Markets in Financial Instruments) Act, 2006 ("the Act") and
the Financial
Services (Markets in Financial Instruments) Regulations, 2007 ("the
Regulations").
Scope of MiFID
MiFID widens the range of ‘core’
investment services and activities that firms can passport.
A full description of these can be found under Schedule 1
of the Act.
In
addition to the services covered by the ISD, MiFID seeks to improve
the following: advice that involves a personal recommendation
to a core investment service that can be passported on a
stand-alone basis; it introduces operating a multilateral trading facility (MTF)
as a new core investment service covered by the passport;
and it extends the scope of the passport to cover commodity
derivatives, credit derivatives and financial contracts for
differences.
Greater Degree of Harmonisation
MiFID sets out more detailed requirements governing the
organisation and conduct of business of investment firms,
and how regulated markets and MTFs operate. MiFID also
includes: new pre- and post-trade transparency requirements for
equity markets; and the creation of a new regime for 'systematic internalisers' of retail order flow in liquid equities. It
also has more extensive transaction reporting requirements.
The FSC has published guidance notes in order to help firms understand
what it is they need to be aware of in order to be MiFID compliant.
Any comments or queries should be forwarded via e-mail to the
Banking and Investment Services Division.
For further information
please click here.