Requirements and Guidance for MiFID Investment Firms

Guidance related to MiFID Firms

The Central Bank has issued guidance on a number of topics to assist users of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017 (“the Central Bank Investment Firms Regulations”), listed below.

The list of topics is as follows:

Investment Firms Q&A

The Investment Firms Q&A sets out answers to queries likely to arise in relation to the Central Bank Investment Firms Regulations, MiFID II and MiFIR. It is published in order to assist in limiting uncertainty. It is not relevant to assessing compliance with regulatory requirements. You should check the website from time to time in relation to any matter of importance to you to see if the position has altered.

On 16 January 2019, the Central Bank has published the seventh edition of its Investment Firms Q&A which includes new Q&As ID 1041 and 1042, in relation to tied agents under the MiFID II Regulations. These Q&As clarify that only EEA MiFID firms can appoint tied agents and that tied agents must be persons established in the EEA.

View all previous versions of the Q&A.

Corporate Governance Requirements

The Central Bank of Ireland is committed to strengthening corporate governance standards and practices across the financial services industry. The Corporate Governance Requirements for Investment Firms and Market Operators 2018 (the Requirements) provide clarity to industry and promote high standards of corporate governance within firms. They supplement and support the MiFID regime. The Requirements are intended to apply to firms authorised by the Central Bank that are designated as High, Medium High or Medium Low Impact under the Central Bank’s Probability Risk Impact System (PRISM). The Requirements will be conditions to which relevant firms are subject pursuant to Regulation 8 of the MiFID II Regulations or section 10(13) of the Investment Intermediaries Act 1995 as applicable. On that basis, the Requirements will be issued to all relevant firms so as to give such firms an opportunity to provide any submissions relevant to their individual firm prior to the Requirements taking effect with any relevant amendments from 1 July 2019. Low Impact firms are encouraged to adopt the Requirements as best practice.

Corporate Governance Requirements for Investment Firms and Market Operators 2018 | pdf 404 KB

Prudential Regime for MiFID Investment Firms

MiFID investment firms, with the exception of those firms for which Article 1(2) or Article 1(5) of the Investment Firms Regulation apply or those that are preparing to submit an application for authorisation under Article 8a(1) of the Capital Requirements Directive as amended by Article 62(6) of the Investment Firms Directive, are required to calculate their capital requirements in accordance with the criteria set out in the Investment Firms Directive and the Investment Firms Regulation.

  MiFID investment firms are required to hold the minimum level of capital as set out in legislation at all times and are required to submit capital returns to the Central Bank on a periodic basis. MiFID investment firms are also required to assess and maintain on an ongoing basis the amounts, types and distribution of internal capital and liquid assets that they consider adequate to cover the nature and level of risks which they may pose to others and to which the firm itself is or might be exposed.

The Central Bank through its Supervisory Review and Evaluation Process will undertake an assessment of the firm’s internal process and this review will be proportionate to the nature, scale and complexity of the activities of the firm.

Implementation of Competent Authority Discretions in the IFD Regulations and the IFR | pdf 797 KB January 2022 Central Bank Statement for MiFID investment firms authorised for MiFID activities (3) or (6) | pdf 469 KB

General Reporting Requirements for Investment Firms

The General Reporting Requirements for investment firms are set out in Regulation 8 of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1))(Investment Firms) Regulations 2017.  As signalled in the consultation paper on Competent Authority Discretions in the Investment Firms Directive and the Investment Firms Regulation to CP 135 and relevant Feedback Statement the Central Bank intends to revise the reporting requirements for MiFID investment firms to align with the classification of MiFID investment firms under the Investment Firms Directive and the Investment Firms Regulation.   Pending formal amendment of the Regulation 8 of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1))(Investment Firms) Regulations 2017 MiFID investment firms should apply the revised reporting requirements as set out in the Appendix to the Feedback Statement to CP 135 from 1 July 2021. 

Central Bank Statement for MIFID investment firms authorised to provide MiFID investment services of dealing on own account or underwriting of financial instruments on a firm commitment basis

Capital Requirements Directive

MiFID Investment Firms referred to in Article 1(2) or Article 1(5) of the Investment Firms Regulation are required to calculate their capital requirements in accordance with the criteria outlined in the Capital Requirements Regulation and Capital Requirements Directive IV.

Implementation of Competent Authority Discretions and Options in CRD IV and CRR | pdf 1559 KB The Central Bank’s Regulatory Document- Implementation of the CRD | pdf 843 KB Impending changes to the Capital Requirements Directive affecting (MiFID) investment firms | pdf 628 KB CEBS Paper on the Internal Capital Adequacy Assessment Process for Smaller Institutions | pdf 253 KB

Resolution

MiFID investment firms subject to the €730,000 initial capital requirement in Regulation 26(2) of the European Union (Capital Requirements) Regulations are subject to the European Union (Bank Recovery and Resolution) Regulations 2015.

Following the transposition of the Investment Firms Directive into Irish law MiFID investment firms subject to the €750,000 initial capital requirement will be subject to the European Union (Bank Recovery and Resolution) Regulations 2015.

On 3 April 2019 the Central Bank published the first edition of its The Central Bank's Approach to Resolution for Banks and Investment Firms (First Edition)', This document:

  • Provides an overview of the resolution framework;
  • Outlines the Central Bank's general perspectives on resolution planning;
  • Details the Central Bank's approaches to setting the minimum requirement for own funds and eligible liabilities (MREL); and
  • Illustrates how the Central Bank would exercise its resolution and liquidation powers in a failure event.

See our resolution explainer also

European Commission and European Supervisory Authorities

Firms are advised to consult the European Commission, ESMA and EBA websites for details of Level 2 measures/technical standards and Level 3 guidance.

Themed Inspections

The following are letters issued by the Central Bank in relation to themed inspections conducted by the Central Bank on MiFID Investment Firms.

Thematic Review of Algorithmic Trading Firms 11 May 2021 | pdf 380 KB Thematic Inspection of Cybersecurity Risk Management in Asset Management Firms March 2020 | pdf 236 KB Thematic Review of Suitability 29 August 2017 | pdf 628 KB Thematic Review Client Reporting 7 July 2016 | pdf 329 KB Thematic Review of Conflicts of Interest 25 February 2016 | pdf 187 KB Thematic Review of Cyber Security and Operational Risk 22 September 2015 | pdf 1611 KB Thematic Review on Client Categorisation under MiFID 19 June 2015 | pdf 158 KB Thematic Review of Data Integrity of Regulatory Returns 12 September 2014 | pdf 983 KB Best Execution under MiFID - Themed Inspection of Investment and Stockbroking Firms 2012 | pdf 76 KB Corporate Governance Standards - Themed Inspection of Investment Firms 2012 | pdf 297 KB

Consumer Protection

The Central Bank has put in place national product intervention measures prohibiting the sale of binary options and restricting the sale of contracts for difference (CFDs) to retail clients. The Central Bank binary options measure takes effect on 2 July 2019 and the Central Bank CFD measure takes effect on 1 August 2019. The measures are exercised by the Central Bank pursuant to Article 42 of MiFIR.

Please view the measures below:

Central Bank CFD Intervention Measure | pdf 786 KB Central Bank Binary Options Intervention Measure | pdf 340 KB

Other regulatory requirements which investment intermediaries must comply with in the area of consumer protection are set out below:

Consumer Protection Code 2012 | pdf 1601 KB Consumer Protection Code 2012 Guidance - Updated December 2012 | pdf 946 KB Minimum Competency Code 2011 | pdf 1205 KB

The Central Bank has set out its expectations of investment firms when unengaging in unregulated activities, particularly with regard to disclosures and communications to clients.

Dear CEO Letter - Central Bank of Ireland's expectations of investment firms when engaging in unregulated activities | pdf 86 KB

Retail investor protections under BRRD

S.I No.713/2020 – European Union (Bank Recovery and Resolution) (Amendment) Regulations 2020 (‘the BRRD Regulations’) came into force on 28 December 2020.  Investment firms (and other sellers, including retail intermediaries) operating in Ireland must comply with Regulation 80A(3) of the European Union (Bank Recovery and Resolution) Regulations 2015 ( S.I. No. 289 of 2015 ) (inserted by Regulation 21 of the BRRD 2 Regulations)  which stipulates that a relevant instrument with a denomination of less than €100,000 shall not be sold to a retail client in the State. This includes eligible liabilities which meets all of the conditions referred to in the Capital Requirements Regulation (CRR), Additional Tier 1 instruments or Tier 2 instruments and does not include ordinary shares regardless of whether such shares are recognised in Common Equity Tier 1, Additional Tier 1 or Tier 2 capital. Firms should consult the BRRD 2 Regulations for the precise scope, but the scope does include subordinated instruments and non-preferred senior unsecured debt instruments, including instruments such as contingent convertible bonds.  Investment firms (and other sellers, including retail intermediaries) should ensure that they comply with the BRRD 2 Regulations.