Financial Services Regulation Update: MiFID II Irish Regulations - What You Need To Know
18 September 2017
In August 2017, the Irish finance minister signed the Irish Regulations that will transpose MiFID II into Irish law; the European Union (Markets in Financial Instruments) Regulations (“MiFID II Regulations”). The MiFID II Regulations are now on track to come into effect on 3 January 2018.
The Safe Harbour
By way of background, the MiFID “safe-harbour” exemption permits “Third Country Firms”, namely non-EU entities, to provide investment services to corporates in Ireland without having to gain authorisation. The MiFID II Regulations have retained the “safe-harbour” exemption, although with a slightly narrower scope.
The exemption will remain largely the same for Third Country Firms who do not provide services to the retail market. Those who do provide services to the retail market will be required to set up a branch in Ireland.
In order to avail of the “safe-harbour” exemption, the Third Country Firm’s home country must not be on the Financial Action Task Force (FATF) list for non-cooperative jurisdictions. In addition, there must be cooperation agreements established between Ireland’s financial regulator, the Central Bank, and the relevant authorities of the firm’s home country.
The “safe-harbour” exemption will also continue to apply to professional clients and eligible counterparties, where the firm is registered on the ESMA register for third country firms.
MiFID II Regulations will continue to allow entities to avail of an optional exemption from the scope of the MiFID II where those entities:
- are separately regulated by the Central Bank
- are not permitted to hold clients’ funds or securities
- can only provide certain investment services
- can only transmit orders to certain categories of firms such as MIFID firms or credit institutions
In addition, the entity must be subject to requirements which are comparable to MiFID II’s requirements regarding conditions and procedures for authorisations, supervision, conduct of business rules and organisational requirements. This will require amendments to be made to the Consumer Protection Code and the Investment Intermediaries Act, 1995. However under the MiFID II Regulations, the existing investment intermediary and investment business firm regimes are being preserved.
In advance of the MiFID II regime coming into effect on 3 January 2018, firms must ensure they understand fully the extent to which the MiFID II Regulations will impact on their business.
Entities who previously availed of exemptions and wish to continue to avail of these exemptions should now consider the MiFID II Regulations and whether the relevant exemptions can still be applied.
For further information on how the MiFID II affects your business, please contact a member of our Financial Regulation team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.