Section 4

Question 1

Scope of MiFID

Answer 1

• Core activities
- Reception and transmission of orders
- Execution of orders
- Portfolio management
- Investment advice
- Underwriting and placing
- Operating an MTF or OTF
• Ancillary services include:
- Safekeeping and administration
- Loans to carry out transactions
- Investment research and financial analysis

Question 2

• MiFID covers these investments:

Answer 2

• Transferable securities
• Units in collective investment schemes
• Money market instruments
• Derivatives on securities, currencies, interest rates or yields
• Commodity derivatives (whether settled for cash or physically when traded on a
  regulated market, MTF or OTF)
• Credit derivatives
• Financial CFD
• Exotic derivatives (e.g. weather, carbon emissions, etc.)

Question 3

MiFID excludes these assets:

Answer 3

• Bank accounts
• Foreign exchange (unless this relates to the provision of an investment
activity or service)
• Physically settled OTC derivatives if used for commercial purposes
• Commodity spot trading

Question 4

Responsibilities of respective regulators

Answer 4

• Home state regulator
- Authorisation
- Prudential supervision (capital adequacy)
- Fitness and propriety
- Conduct of business in home state
- Conduct of business for cross-border services from any state
- Client assets
• Host state regulator
- Conduct of business in host state when performed from a branch in the host state (for MiFID business these rules should be the same)