Introduction to MiFID Investment Firms

The Central Bank is responsible for:

  • the prudential regulation and supervision of MiFID Investment Firms authorised in Ireland;
  • the regulation and supervision of the conduct of business of MiFID firms authorised in Ireland; and
  • the regulation and supervision of those provisions of MiFID II relevant to the financial services market in Ireland.

Background to MiFID

The original Markets in Financial Instruments Directive (MiFID I) was introduced on 1 November 2007 to set out European Union (EU) regulation in respect of securities and financial markets. On 3 January 2018 it was replaced by a revised package of rules, collectively known as MiFID II.

MiFID II governs the provision of investment services in financial instruments. It applies to investment firms, wealth managers, broker dealers, product manufacturers and credit institutions authorised to carry out MiFID activities. It also impacts on trading venues, market operators, alternative investment fund managers, investment intermediaries, data reporting services providers as well as third-country firms providing investment services in the EU.

Summary of some of the changes under MiFID II

Conduct of Business & Investor Protection: The role of the compliance officer is enhanced under MiFID II. Compliance officers need to ensure that staff selling or advising on MiFID financial instruments understand the compliance requirements under MiFID II. There are also stricter remuneration controls in place for staff advising or selling to clients. This is to ensure staff act in the best interests of their clients. Disclosure of information to clients of investment firms has also increased. For example, advisory and portfolio management clients receive a detailed suitability assessment periodically.

Supervision Powers: Competent authorities, such as the Central Bank, and European Supervisory Authorities, such as the European Securities and Markets Authority (ESMA), or the European Banking Authority (EBA) now have the ability to restrict or suspend the marketing and/or sale of financial instruments under certain circumstances when elevated investor or financial stability risks exist.

Governance: MiFID II places stricter governance requirements on MiFID investment firms. Qualified senior management and directors must commit sufficient time to perform their functions

Broadened Scope: New financial instruments are within scope (such as emissions allowances and structured deposits). MiFID II has also removed or narrowed some exemptions. For example, MiFID II now brings investment firms whose sole activity is dealing on their own account using a high frequency trading technique into scope. Consequently, some firms may now require an authorisation under MiFID II.

Firm Authorisations: MiFID II ensures a standardised authorisation process across Europe. For further information on MiFID authorisations, please refer to the authorisation process section of our website.

New Trading Venue: The Organised Trading Facility (OTF) has been introduced which caters for trading in non-equity instruments (such as bonds, structured products and derivatives).

Transaction Reporting: MiFID II requires firms to report significantly more information including the identification of individuals or computer algorithms responsible for an investment decision.

Transparency: MiFID II strengthens the overall transparency regime for the financial markets. It does this by broadening the transparency requirements from equities and equity-like instruments to non-equity instruments. This will ensure a broader range of pre-trade and post-trade disclosures are made in relation to orders submitted to and transactions conducted on trading venues.

Important Information for MiFID Investment Firms

MiFID investment firms may be subject to additional legislation, please consult the legislation and regulatory requirements and guidance pages of this website for further information. These pages contains information in relation to the new prudential regime applicable to MiFID investment firms, the Investment Firms Regulation (IFR) and Investment Firms Directive (IFD).