What is MiFID (Markets in Financial Instruments Directive);
- Mifid is the European Union Directive committed to creating more effective and unified financial markets (ruling 2004/39/ΕΚ)
- It is in force in all EU member states as of Thursday 1st November 2007, and fully adopted by Eurocorp.
- This ruling strengthens the institutional framework and allows the harmonization and integration of financial markets and capital markets in the European Union and makes significant changes mainly emphasising:
- Complete information of investors
- Protection of investors
- Transparency and market efficiency
- Uniformity in the organization of all companies of the financial sector for the provision of investment services
Which products are affected?
- MiFID concerns the majority of financial products such as stocks, bonds, mutual funds, derivatives etc. A detailed report on all financial instruments can be found in publication: Financial Instruments.
- It also concerns all investment services (primary and secondary) indicatively reception and transmission of orders, execution of orders, portfolio management, investment advice, etc.
Which investors are concerned?
- All investors whether they are individuals, professionals, natural or legal entities.
- The ruling imposes the classification of all clients into three categories:
- Retail Client: virtually any person not a professional client or eligible counterparty. These are primarily investors, natural or legal entitires, who do not have significant knowledge and experience of the markets and financial instruments. They enjoy the greatest degree of protection, but also adopt additional procedures when providing investment services such as full information for each product the customer intends to invest in.
- Professional clients: these investors are natural or legal entities who possess proven knowledge and experience of the markets and financial instruments. They enjoy a lower degree of protection.
- For professional and private customers, Eurocorp creates the customer investment profile based on special questionnaire filled by each client, in order to know the financial background, objectives and expectations from their investments, and their risk appetite.
Prior to MiFID
MTF: Multilateral Trading Facility, a multilateral system, operated by an investment firm or a market operator, in which several third-party interests meet buying and selling financial instruments -within the system and according to rules that are not discretionary - in a way that results to a transaction.
Systematic internaliser: An investment firm which transacts on an organized manner, frequently and systematically for own account executing client orders outside a regulated market or MTF