1 What is the investment services directive? In 1993 the European Commission adopted a legislativ...
1 What is the investment services directive?
In 1993 the European Commission adopted a legislative framework to provide European financial services firms with a passport for their investment services, known as the investment services directive (ISD).
A subsequent review of the ISD in 1999 identified the directive needed to be adapted to reflect the changing nature of the European financial services market. One of the main objectives was to revise the ISD to reflect the way markets currently operate and make it more sensitive to changes.
The Markets in Financial Instruments Directive, or Mifid, was born and the main text was adopted at European level in 2004. The aim of Mifid is to move European financial services closer to a single market by aligning local conduct of business rules and applying one set of regulations to firms operating in different countries. The directive also aims to expand the scope of the passport to include a wider range of services, including investment advice.
3 What's next?
When adopted, Mifid will affect firms such as portfolio managers, investment banks, brokers, futures and options firms, corporate finance companies and some financial advisers.
4 Who will be excluded?
Managers and depositaries of collective investment schemes are excluded but advising on such schemes is covered. Insurance products and insurance companies will fall outside the scope of the directive.
As with all European directives, local regulators have been working to adopt the rules into local regulation. The deadline for national rules to be in place was 31 January 2007, with the new rules coming into effect from 1 November.
Helen Stephenson, communications officer, Investment Management Association