MiFID II exemptions - provision of investment service in an incidental manner

 


 

 

The general conditions under which the provision of investment service in an incidental manner may be exempted from the MiFID II Directive are stipulated in Article 2(1)(c) thereof.

 

The factual circumstances this Article refers encompass the service being provided in an incidental manner in the course of a professional activity while this activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the provision of that service.

 

Detailed requirements giving shape to the above high-level norm have been stipulated in Article 4 of the Commission Delegated Regulation (EU) 2017/565 of 25.4.2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.

 

Consequently, an investment service is considered to be provided in an incidental manner in the course of a professional activity where the following conditions are satisfied:

 

(a) a close and factual connection exists between the professional activity and the provision of the investment service to the same client, such that the investment service can be regarded as accessory to the main professional activity;

 

(b) the provision of investment services to the clients of the main professional activity does not aim to provide a systematic source of income to the person providing the professional activity; and

 

(c) the person providing the professional activity does not market or otherwise promote his ability to provide investment services, except where these are disclosed to clients as being accessory to the main professional activity.

 

The exemption should only apply if the investment service "has an intrinsic connection to the main area of the professional activity and is subordinated thereto" (Recital 34 of the Commission Delegated Regulation of 25.4.2016).

 

 


Article 2(1)(c) of the MiFID II Directive

Exemptions

 

This Directive shall not apply to:

...

(c) persons providing an investment service where that service is provided in an incidental manner in the course of a professional activity and that activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the provision of that service

 

 

 

 

Commission Delegated Regulation (EU) 2017/565 of 25.4.2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive

 

Article 4

Provision of investment service in an incidental manner

(Article 2(1) of Directive 2014/65/EU)

 

For the purpose of the exemption in point (c) of Article 2(1) of Directive 2014/65/EU, an investment service shall be deemed to be provided in an incidental manner in the course of a professional activity where the following conditions are satisfied:

 

(a) a close and factual connection exists between the professional activity and the provision of the investment service to the same client, such that the investment service can be regarded as accessory to the main professional activity;

 

(b) the provision of investment services to the clients of the main professional activity does not aim to provide a systematic source of income to the person providing the professional activity; and

 

(c) the person providing the professional activity does not market or otherwise promote his ability to provide investment services, except where these are disclosed to clients as being accessory to the main professional activity.

 

 

 


 

 



Last Updated on Thursday, 20 April 2017 22:04
 

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