Market Change

Markets in Financial Instruments Directive (MiFID)

On November 1, MiFID will replaced the Investment Services Directive, which has governed the activities of investment firms and markets in the EU since 1995.

At Citi we expect MiFID to drive global change. It actively encourages harmonization of custody rules, standard classification of customers and equal benchmarks for Outsourcing.

Citi was quick to recognize the impact of MiFID on concentration rules and transparency, and was one of seven investment banks to co-launch Turquoise, a pan-European multi-lateral trading facility.

What is MiFID?
As you may know, MiFID was adopted in 2004 by the European Commission and applies in the entire European Union and the additional countries that make up the European Economic Area (which we refer to as 'Europe'). The European Commission and national financial services.

MiFID replaces the Investment Services Directive (the 'ISD') which established what is known as the passport regime under which a financial services firm in one European country can do business in another, either cross-border from its home jurisdiction or through branches. The ISD was a cornerstone of the European program to reduce barriers to cross-border financial services, but it did not cover all products and left in place many nonrandomized local rules. MiFID is intended to broaden the scope of the ISD and to further harmonize the rules in Europe. Some of the key changes implemented by MiFID are that it:

  • eliminates the 'concentration rules' under which each EEA nation could require trading in national securities on a national platform. This opens the market for new trading venues, including possible multinational platforms.
  • introduces new rules on client classification.
  • harmonizes the conduct of business rules applicable to financial services firms

While some jurisdictions have adopted nearly a full set of implementing rules under MiFID, it appears likely that a number of countries will not have implemented a full set of rules until near the implementing deadline of 1 November 2007 or after. However, since a primary purpose of MiFID was to harmonize the law of the European jurisdictions regulating financial service providers, it seems a fair assumption that the rules in the various jurisdictions under MiFID will be similar.

Citi has been working on getting ready for MiFID since early 2006. This has included:

  • comprehensive reviews of Citi businesses to compare what is required under MiFID to what was required under the ISD and identify the gaps
  • revisions to documents and drafting of new or revised policies
  • identification of technology and process changes needed and training

At Citi, we're proud to have built our services on a global network, embedded local knowledge and technological leadership in end-to-end, online and offline solutions.


MiFID Policies
The policies below confirm how Citi is complying with MiFID rules and working in the best interests of those clients who are classified as receiving MiFID eligible services from any Citi legal entities in the European Economic Area. These services are Direct Custody, Global Custody, Securities Lending (in relation to cash reinvestment), Online Investments, Treasury Services Group and any other services provided in conjunction with Custody).

The "General Policy," sets out the basis on which Citi Markets & Banking will provide "best execution." Where a particular Citi business has established additional policy requirements applicable specifically to that business, we refer to each of those policies as a "Desk Policy."