MiFID II
New MiFID II rules will come in force soon: 3rd January 2018
Financial services companies doing business across the European Union are preparing and implementing changes as per the revised Markets in Financial Instruments Directive (MiFID). Any business with EU subsidiaries or operations in the investment services field is likely to be affected by MiFID II.
Gildencrest Capital Ltd conducting an FCA regulated business is required to comply with MiFID II and as such will be in touch with its clients to communicate updates to its Terms of business in line with new regulations. The new regulatory framework aims at strengthening investor protection and improving the functioning of the financial markets. Efficiency, resilience and transparency are the focus areas of the new legislation.
What is MiFID II?
The Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for services to clients linked to ‘financial instruments’ and the venues where those instruments are traded.
MiFID was applied in the UK from November 2007, but is now being revised to improve the functioning of financial markets in light of the financial crisis and to strengthen investor protection.
The first 2007 version of MiFID was applied solely to equity markets, whereas MiFID II applies to “non-equity products” as well, such as cash and derivative products in fixed income, FX and commodities.
The changes are currently set to take effect from 3 January 2018, with the new legislation being known as MiFID II — this includes a revised MiFID 2014/65/EU and a new Markets in Financial Instruments Regulation (EU) No. 600/2014 (MiFIR).
It is expected that MiFID II will impact FX operations at financial firms and corporations globally. European regulators don’t have direct influence on firms domiciled outside of the EU, but it’s anticipated that European firms, in order to be MiFID II compliant, will demand additional disclosures and reports from their non-EU counterparts.
What MiFID II means for Gildencrest Capital Ltd
& Clients?
The level of change in operation and firm’s functions will depend upon the business model and the country, some firms will need to make more significant changes than others. MiFID II has very broad requirements, from transparency reporting to demonstrating best execution and archiving communications. Some obligations could extend beyond EU shores.
The key requirements for Gildencrest Capital Ltd and its Clients will include:
- Client Classifications - National Client Identifiers
All clients of financial service providers, including clients Gildencrest Capital Limited must be identified using the most appropriate National Client Identifier (NCI).
To meet this requirement under MiFID II Gildencrest Capital Ltd will request its clients to disclose their nationality and dual nationalities if applicable. Gildencrest Capital Ltd will also require a copy of corresponding National Client Identifier(s), which should be sent by the Client in order to continue trading.
If you are outside of the EU / EEA and do not have NCI in your country, Gildencrest Capital Ltd will require a copy of your valid passport.
Please note across the world and EU a National Client Identifier (NCI) could be called differently, refer to National Client Identifier Table below or contact us using details provided on the contact us page.
National Client Identifier Table
UK |
UK National Insurance Number |
Belgium |
Belgian National Number - Numéro de registre national – Rijksregisternummer |
Bulgaria |
Bulgarian Personal Number |
Croatia |
Personal Identification Number - Osobni identifikacijski broj (OIB) |
Cyprus |
National Passport Number |
Czech Republic |
National Identification Number - Rodné číslo |
Denmark |
Personal Identify Code - CPR |
Estonia |
Personal Identification Code - Isikukood |
Finland |
Personal Identity Code |
Greece |
Personal ID - 10 DSS digit investor share |
Iceland |
Personal Identify Code - Kennitala |
Italy |
Fiscal Code - Codice fiscale |
Latvia |
Personal code - Asmens kodas |
Lichtenstein |
National Identity Card Number -Personenidentifikationsnummer (PEID) |
Lithuania |
Personal code - Asmens kodas |
Malta |
National Identification Number |
Netherlands |
National Identity Card Number - Persoonsnummer |
Norway |
Personal ID - Foedselsnummer |
Poland |
Poland - PESEL / Numer identyfikacji podatkowej Or Tax Number (Numer identyfikacji podatkowej) |
Portugal |
Tax Number - Número de Identificação Fiscal |
Romania |
National Identification Number - Cod Numeric Personal |
Slovakia |
Personal Number - Rodné číslo |
Slovenia |
Personal Identification Number - EMŠO: Enotna Matična Številka Občana |
Spain |
Tax identification number - Código de identificación fiscal |
Sweden |
Personal Identify Number - Personnummer |
- Communications recording
MiFID II requires firms to keep extensive records of all transactions, communications, services and activities for 10 years, in order for them to be able to provide transparency into the trade life cycle. This is to support trade reconstruction if required.
As such please be advise that Gildencrest Capital Ltd is improving its existing systems and that that all relevant communications between you and Gildencrest Europe Limited will be recorded and stored securely within its systems and facilities as per the General Data Protection Regulation (Regulation (EU) 2016/679) or any successor law enacted in England and Wales (“Data Protection Laws”).
- Conflicts of interest
MiFID II now requires firms to consider all risks in conflict of interest, rather than just “material risk” as is currently the case.
In this respect Gildencrest Capital Ltd reviewing its existing procedures ensures they are sufficiently robust and expanding them as necessary and focusing even more on “prevent or manage” processes rather than disclosure.
- Best execution
MiFID II investment firms will be required to take all sufficient steps to obtain, when executing orders, the best possible result for their clients – taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other relevant consideration. Currently, MiFID only requires firms to take all reasonable steps to obtain the best result for their clients. The difference means that firms should take a systematic approach and monitor all trades.
- Enhanced transaction reporting
The requirements to report transactions under MiFID II will become both more wide-ranging and prescriptive in comparison with MiFID. It is also worth noting that the relevant requirements are present in MiFIR, which is directly applicable in all the Member States of the EU.
MiFID II extends transaction reporting requirements to all financial instruments traded in the EU, which will need to be reported to approved reporting mechanisms (ARMs) or the client’s National Competent Authority.
Requirement of LEI for corporate clients
Legal Entity Identifier (LEI) is a unique identifier associated with a single legal entity which provides consistent identification of parties to financial transactions. Gildencrest Capital Ltd will request LEI’s from its corporate clients which is a legal requirement as of 3rd Jan 2018. If corporate client cannot provide LEI Gildencrest Capital Ltd will stop the account.
LEIs are mandated by European Market infrastructure Regulation (EMIR) and MiFID II. For more information on LEI please contact us or visit https://www.fca.org.uk/markets/mifid-ii/legal-entity-identifier-lei-update .
Does Brexit matter for MiFID II?
No. The UK will still be a member of the EU on January 3, 2018, so firms must comply with the changes to UK laws and regulations. Moreover, when the UK leaves the EU, the current plan is for MiFID II (and other European legislation) to continue to apply until further consideration. It is likely that even at such later date the FCA will either adopt its provisions, or substantially similar rules.
Have questions or unsure about MiFID II
Contact us via
Phone: +44(0)203 048 4764
Email: compliance@gildencrest.co.uk
For further reading: