Requirement (MIFID)
Article 4 Definitions
Requirements MIFID - DIRECTIVE 2004/39/EC
Description
Description
1. For the purposes of this Directive, the following definitions shall
apply:
1) ‘Investment firm’ means any legal person whose regular occupation
or business is the provision of one or more investment services to
third parties and/or the performance of one or more investment
activities on a professional basis;
Member States may include in the definition of investment firms
undertakings which are not legal persons, provided that:
(a) their legal status ensures a level of protection for third parties'
interests equivalent to that afforded by legal persons, and
(b) they are subject to equivalent prudential supervision appropriate
to their legal form.
However, where a natural person provides services involving the
holding of third parties' funds or transferable securities, he may be
considered as an investment firm for the purposes of this Directive
only if, without prejudice to the other requirements imposed in this
Directive and in Directive 93/6/EEC, he complies with the following
conditions:
(a) the ownership rights of third parties in instruments and funds
must be safeguarded, especially in the event of the insolvency
of the firm or of its proprietors, seizure, set-off or any other
action by creditors of the firm or of its proprietors;
(b) the firm must be subject to rules designed to monitor the firm's
solvency and that of its proprietors;
(c) the firm's annual accounts must be audited by one or more
persons empowered, under national law, to audit accounts;
(d) where the firm has only one proprietor, he must make provision
for the protection of investors in the event of the firm's cessation
of business following his death, his incapacity or any other such
event;
2) ‘Investment services and activities’ means any of the services and
activities listed in Section A of Annex I relating to any of the instruments
listed in Section C of Annex I;
The Commission shall determine, acting in accordance with the
procedure referred to in Article 64(2):
— the derivative contracts mentioned in Section C 7 of Annex I
that have the characteristics of other derivative financial instruments,
having regard to whether, inter alia, they are cleared and
settled through recognised clearing houses or are subject to
regular margin calls
— the derivative contracts mentioned in Section C 10 of Annex I
that have the characteristics of other derivative financial instruments,
having regard to whether, inter alia, they are traded on a
regulated market or an MTF, are cleared and settled through
recognised clearing houses or are subject to regular margin calls;
3) ‘Ancillary service’ means any of the services listed in Section B of
Annex I;
4) ‘Investment advice’ means the provision of personal recommendations
to a client, either upon its request or at the initiative of the
investment firm, in respect of one or more transactions relating to
financial instruments;
5) ‘Execution of orders on behalf of clients’ means acting to conclude
agreements to buy or sell one or more financial instruments on
behalf of clients;
6) ‘Dealing on own account’ means trading against proprietary capital
resulting in the conclusion of transactions in one or more financial
instruments;
7) ‘Systematic internaliser’ means an investment firm which, on an
organised, frequent and systematic basis, deals on own account by
executing client orders outside a regulated market or an MTF;
8) ‘Market maker’ means a person who holds himself out on the financial
markets on a continuous basis as being willing to deal on own
account by buying and selling financial instruments against his
proprietary capital at prices defined by him;
...
Referenced requirement
Article 39 Derivatives within Section C(10) of Annex I to Directive 2004/39/EC
Article 21 Criteria for determining whether an investment firm is a systematic internaliser
Article 52 Investment advice
Article 38 Characteristics of other derivative financial instruments