MiFID II: Stricter Conduct of Business Rules for Investment Firms
D. Busch, MiFID II: Stricter Conduct of Business Rules for Investment Firms, Capital Markets Law Journal 2017/3, p. 340-380
39 Pages Posted: 2 Nov 2017 Last revised: 10 Nov 2018
Date Written: November 1, 2017
The article offers a detailed account of the new MiFID II conduct of business rules applicable to investment firms providing investment services. In each case, the new rules are compared with the existing MiFID I regime.
The article addresses the following topics: (i) the definition of ‘investment firm’; (ii) the reclassification of certain cases of dealing on own account to dealing on behalf of the client; (iii) client classification; (iv) the general duty of loyalty; (v) information obligations; (vi) know your customer rules; (vii) best execution; (viii) client order handling; (ix) conflicts of interest; (x) inducements; and (xi) obligations to record telephone conversations and electronic communications.
The article shows that conduct of business rules are tightened, clarified and expanded in various respects. For investment firms and their advisers, the devil is well and truly in the detail. The stricter rules will in any event make it necessary to modify many aspects of the standard contracts and other documentation used in contacts with clients.
Keywords: MiFID II, Investment Firm, Dealing on Own Account, Dealing on Behalf of the Client, Client Classification, General Duty of Loyalty, Information Obligations, Know Your Customer, Best Execution, Client Order Handling, Conflicts of Interest, Inducements, Record Telephone Conversations
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