MiFID II Summary, What It Is and How It Affects You

by | Jun 23, 2017 | Comunycarse News

MiFID II Summary in Spain

On January 3rd, 2018, MiFID II came into effect in Spain, which seeks to provide more transparency in the financial advisory and financial products market. Currently it is causing quite a stir among financial institutions. On the one hand because they know little about the concrete details of the regulation or its implications, and on the other hand because of the technological solutions, as the recording of calls and SMS, they will need to implement in order to comply with MiFID II regulations, and to avoid being fined.

Some sectors are critical of the new MiFID II directive because they think that is does not solve the most important issue, the prohibition of charging third parties commission for marketing their products to clients, among the most important companies that this applies to is investment funds, on the other hand is smoothed with a series of exceptions in which almost everything enters.

With a greater focus on transparency of financial institutions, MiFID II will have a broader scope than MiFID I, and will affect all modes of client interactions in terms of processing of financial instruments, business and operational models, systems and data, and people and processes.

What is MiFID II?

MiFID (Markets in Financial Instruments Directive) is a European directive that aims to create transparency and regulation in the stock markets and financial sector for the benefit and protection of the investors, by regulating organizations and relationships with clients of financial institutions, specifically those companies that provide investment services.

The new Directive focuses on the safety, efficacy and transparency of financial markets for the benefit of increased investor projection.

Benefits of MiFID II:

  • Better Enhanced Execution
  • Greater transparency of markets
  • Orderly market behavior
  • A shift in trade to more structured markets
  • Lower cost market data
  • More explicit negotiation and investment costs

PDF – Regulation (link)

When does MiFID II enter into force?

On January 3rd, 2018, MiFID II came into effect in Spain. now all companies in the financial sector, including large banks and even small intermediary companies, among many others, will be obliged to comply, the most important aspects the technological, which begins with the total recording of all the conversations that financial companies have with the clients, and the receipt for 5 years.

How does MiFID II affect financial sector companies?

Companies in the Financial Sector will need to implement new technology for the obligatory recording of the mobile and landline calls, emails and text messages (SMS), among others, in order to keep a record of any interaction between employees and potential clients and current customers. The new regulation will require the secure and professional safekeeping of this information for a period of 5 years. Records may be requested by a judge in the situation of a lawsuit related to bad practices or deception in the sector.