Investment services (MiFID)

Question 1

What is the objective of MiFID?

Answer 1

To promote cross-border investment services

To create an integrated financial market

To promote efficiency and integrity of the financial markets

to protect investors

And to address weaknesses revealed by the financial crisis

Question 2

How was MiFID implemented in Iceland

Answer 2

lög um markaði fyrir fjármálagerninga

Question 3

What is the scope of MiFID?

Answer 3

Investment firms
Credit institutions providing investment services and investment activities

Also other entities like market operators

Question 4

What is the main content of MiFID

Answer 4

Scope and definitions
Authorization and operating conditions for investment firms
regulated markets
Commodity derivatives
CA
Delegated acts

Question 5

What is MiFIR

Answer 5

Its a regulation that compliments MiFID and the main contents of MiFIR are:

to promote transparency
Rules regarding derivatives
and allow of delegated and implementing acts
among others

Question 6

What are regulatory technical standards and implementing technical standards?

Answer 6

They standards that ESMA drafts and sumbmits to the commission

The commission then adopts in the form of a regulation or a decision

Question 7

What are financial instruments?

Answer 7

Transferable securities, negotiable on the capital market, such as shares or bonds

Money-market instruments, such as treasury bills

units in collective investment undertakings

and derivative contracts

Question 8

What is the definition of an investment firm?

Answer 8

A legal person whose regular occupation or business is:

The provision of investment services to third parties

or the performance of investment activities on a professional basis

Question 9

What are investment services and activities?

Answer 9

They are services or activities provided by IF or banks. They are listed out in Annex I of MiFID

Question 10

Tell me about Annex I of MiFID

Answer 10

Annex I is split into section A and section B

Section A lists out investment services and activates

For example:
Receipt and transmission of orders in relation to financial instruments, execution of orders on behalf of clients and portfolio management

Section B lists out ancillary services

For example:
Safekeeping and administration of financial instruments for the account of clients, ancillary advice on, for example, mergers and acquisitions

Question 11

Dose MiFID deal with authorization?

Answer 11

Yes, investment services or activities are subject to prior authorization granted by the CA

The authorization covers specified services/activates and the authorization has mutual recognition across the EEA

Question 12

Can a CA withdraw authorization?

Answer 12

Yes,
if:
Authorization is not used within 12 months

Authorization has been obtained by false statements

firm fails to meet conditions under which the authorization was granted

if there is a serious infingement of MiFID of MiFIR

Question 13

What are the conditions for authorization?

Answer 13

Management must be fit and proper

Shareholders that have QH must be suitable

They must meet initial capital requirements specified in the CRR

and they must meet organizational requirements and be a member of investor compensation scheme

Question 14

What is the fit and proper management criteria?

Answer 14

The management body must be fit and proper, that is, must be of sufficiently good reputation and have experience as to ensure sound and prudent management of the IF - reference to CRD IV

The CA assesses this

Question 15

What is the suitability of shareholders criteria?

Answer 15

The CA must know and assess the suitability of shareholders having qualifying holdings

The shareholders must be suitable to ensure a sound and prudent management of the IF

Question 15

What is QH?

Answer 15

WH is any direct or indirect holding in an IF which is:

10% or more of the capital or voting rights or,

makes it possible to exercise significant influence over the management of the IF

Question 15

What is the organizational requirements criteria?

Answer 15

IF must establish policies and procedures to ensure compliance of its obligation to, e.g.:

Prevent conflict of interest

Maintain a process for approval of new products

Ensure continuous and regular activates