MIFID Regulated Brokers

Hi fellas,

After a research I found out that most of the European FX brokers are MIFID regulated, do you guys think that MIFID is a reliable base of regulation? Having in mind that UK is a part of the European Union does it mean that FSA licensed brokers are MIFID regulated too?


Regards,
50 Pips

MIFID is an EU directive. A directive is not the same as a national law, it means that all member states have to implement the contents of the directive into national law. There is no central european authority that regulates financial markets according to mifid (yet), but all national regulators need to adhere to mifid-standards as a minimum.

So, FSA-regulated firms are not additionally mifid-regulated too, but the FSA implemented the mifid-standards into their own rule framework.

Hello mates,
It seems to me that the situation with MiFID is slightly different. MIFID as EU directive is document that all financial regulators in EU need to comply with. FSA does this and keep working to implement all MIFID requirements into its work. FSA is member of CESR as all other European Union regulators. You can easily check on http://www.cesr-eu.org/index.php?pag...tory&mac=0&id.
You can fine the information about how FSA works to comply with MIFID at
http://www.fsa.gov.uk/Pages/About/Wh...al/index.shtml
From FSA’s web site
“Because of the increasingly global nature of markets, regulators have been increasing the levels of regulatory communication and co-operation and enhancing the role of international standard-setting regulatory organisations. The FSA participates actively in these fora, which include the Basel Committee, the International Organisation of Securities Commissions, and the International Association of Insurance Supervisors. Globally agreed standards are typically then adapted and applied to local markets.
Much UK financial services regulation originates in the European Union. The EU is also very active in developing rules for Europe's financial markets that are designed to deepen the internal market. Since the UK has to give effect to European law, active engagement with Europe is essential. Indeed, around 70% of the FSA's policymaking effort is driven by European initiatives, including the Financial Services Action Plan (FSAP).
It is crucial that the standards developed in international forums are proportionate and informed by economic analysis. Otherwise, better regulation domestically would be more difficult to achieve.
Key priorities for FSA’s work in the EU and international area

 

1. Better regulation, i.e. extensive consultation with stakeholders, consideration of the use of non-legislative tools, rigorous impact assessments of policy options, and subsequent review of measures to assess their actual impact.
2. Continued commitment to a strengthened Lamfalussy structure.
3. Enhanced supervisory co-operation in the EU and international context to improve oversight of firms operating on a cross-border basis.
4. Promotion of principles-based and risk-based approaches in global fora, such as the sectoral committees and the Financial Stability Forum (FSF).

UE Directives implemented in the UK

 

1. Capital Requirements Directive (CRD)/Basel 2
2. Markets in Financial Instruments Directive (MiFID )
3. Transparency Directive
4. Third Money Laundering Directive [PDF]”

You can also check
http://www.fsa.gov.uk/pages/About/What/International/MiFID /index.shtml
“The Markets in Financial Instruments Directive (MiFID ) came into effect on 1 November 2007, and replaced the existing Investment Services Directive (ISD).”
As far as I know all EU member regulators had to implement MIFID requirements or are subject of financial penalties. So it is obvious that MIFID is obligatory for FSA and is the leading major regulating document for the financial services business in EU.

Greetings,

Thank you Karol for the detailed information. I found it very useful. I did further research on the issue from the links you gave above and my conclusion is that MiFID indeed is reliable base for regulation, therefore MiFID regulated brokers are good choice as well.


Cheers!

In layman's terms a regulatory body like FCA, BaFIN or CySEC regulates and licenses brokers that are in their jurisdiction. All brokers in such an EU jurisdiction will need to be in compliant with the MiFID directive in order to be in compliance with their license issued by one of the above regulatory bodies.

Please dont be confused MiFID is not a regulator but an EU directive for the EU regulatory bodies and EU regulated firms to follow.