The European Markets in Financial Instruments directive (MiFID) has been drawn up by the European Committee. The Committee aims to increase and improve the protection of investors by making financial markets operate in a more transparent and efficient manner. MiFID will replace the present Investment Services Directive and forms part of the European Financial Services Action Plan to create a uniform European capital market.
MiFID will be implemented with effect from 1 November 2007 in all member states of the European Union. Investment organisations with a 'European passport' will then be able to offer investment services across Europe.
MiFID involves a large number of regulations for the financial markets within the European Union and for investment organisations that execute orders in these markets. The ultimate aim of these regulations is to offer investors a high degree of protection during the execution of their securities orders.
In short, investment organisations must take all reasonable measures to enable the best possible execution of securities transactions of their clients. This protection also includes clear regulations regarding the nature and amount of information that investment organisations must provide to their clients.
MiFID relates to all tradable financial products (including derivatives), with the exception of forex transactions. The obligation of pre-trade and post-trade transparency is at present only applicable to securities trading. However, it will be extended to all financial instruments in due course.
For additional information on MiFID, client classification, best execution etc, please refer to our FAQ, Order execution policy, Summary of Conflict of Interests Policy and KAS BANK and remuneration agreements under MiFID.