MiFID II - the European Markets in Financial Instruments Directive

What is MiFID II?

The Markets in Financial Instruments Directive II (MiFID II) is a European directive that will expand the MiFID rules of 2007. It will come into effect on 3 January 2018. MiFID provides a complete, harmonised regulatory framework for the financial markets and financial instruments in the European Union, Iceland, Norway and Liechtenstein. The MiFID directive affects all companies that offer investment services or services related to financial instruments, such as banks, stockbrokers and other financial intermediaries.

 

MiFID aims to strengthen the efficiency and transparency of the financial markets in order to generate a new commercial dynamic that will primarily benefit the investors. The directive therefore offers investors more protection thanks to:

  • A better balance between the proposed products and services and their risk profile
  • The optimal execution of orders
  • Higher order management standards
  • Communication of accurate information

MiFID II expands the previous MiFID directive further to guarantee transparency and protect investors. This page provides all information on these regulations.

Investor profile

Because we want our investment services to meet our customers' requirements as accurately as possible, we will make an even greater effort to gather the necessary information. This allows us to offer our customers an even better service. More information is therefore required to determine the investor profile. This information is about issues such as investment product knowledge and experience, the overall investment objectives and horizon and the customer's financial situation. For non-professional customers, this information is obtained by determining an investor profile.

Specific guidelines for Discretionary Portfolio Management

Within the Discretionary Portfolio Management (DPM) service concept, ABN AMRO Bank N.V. (hereinafter ABN AMRO) manages the customer's portfolio. Before we place an order, we will check whether the order is suitable for the investment customer and whether the order is in line with the investor profile objectives.

Specific guidelines for Advice

Within the Advice service concept, ABN AMRO offers the customer personalised recommendations with a view to a transaction (buying and selling). We only want to recommend investment products that are suitable for the customer. It is not allowed to recommend products that are unsuitable for the customer.

ABN AMRO's assessment of the investment products' suitability takes into account:

(i) The customer's investment objectives and horizon

(ii) The customer's financial position

(iii) The customer's financial capacity and willingness to take risks

(iv) The customer's knowledge and experience in terms of all investments

From January 2018, the customer will receive a document with every recommendation we offer and before any order is entered. This document will show whether the order or recommendation is suitable for the stated investment objectives and risk profile. It allows the customer to see whether the order that is about to be placed is suitable and appropriate. The document also offers more insight into the applicable charges and taxes for the relevant order.

Specific guidelines for Execution Only

Within the Execution Only service concept, the customer is in complete control and ABN AMRO only handles the professional, speedy execution of the transactions. Once the order is executed, we send the customer information on the product's suitability for the investor profile and on the product itself in some cases.

Other MiFID aspects (applicable to all service concepts)

Optimal order execution

One of the basic MiFID principles is the best execution of orders. This means that the financial intermediary has to take all reasonable steps to ensure the optimal execution of orders. 

The ABN AMRO order execution policy determines the criteria that are decisive in this regard. As a customer, you have the option to give specific instructions that may cause ABN AMRO to deviate from its order execution policy. If this is the case, the customer will be informed that the application of the principle of optimal execution cannot be guaranteed. A full summary of the current ABN AMRO order execution policy is available here

Under MiFID II, we now also publish the Best Execution report on our website every year. This report provides an overview of the top 5 markets where the highest number of orders was executed.

Information to customers

MiFID emphasises that all communication to customers must be timely, transparent, clear and non-misleading. The communication includes all information the customer needs to assess the risks, the expected charges and the return of each proposed product or service.

The bank will inform its customers of the execution of orders and the underlying transactions, the valuation of the financial instruments and the customers' capital held by the bank.

The customers will be fully and regularly informed on the provided products and services. The directive provides specific rules for this report, both in terms of content and frequency:

  • The customers must receive an execution confirmation. 
  • The customers will receive a summary of their assets at least once a year with more transparency in terms of charges and taxes.
  • The customer will be informed if the value of the customer's investment portfolio falls by more than 10% since the previous report.

Information to the regulator

Financial institutions must provide more detailed reports to the regulator from 3 January 2018. The objective is the promotion of market transparency. This also means that ABN AMRO will report all security transactions to the regulator.

General Terms and Conditions

Our General Banking Terms and Conditions include various aspects of the MiFID directives. You can read the document by clicking here.

Any questions?

Do not hesitate to contact your ABN AMRO contact person. He or she will be happy to assist.

Febelfin Brochure: MiFID II: What will change for me?

Investor profile

Because we want our investment services to meet our customers' requirements as accurately as possible, we will make an even greater effort to gather the necessary information. This allows us to offer our customers an even better service. More information is therefore required to determine the investor profile. This information is about issues such as investment product knowledge and experience, the overall investment objectives and horizon and the customer's financial situation. For non-professional customers, this information is obtained by determining an investor profile.

Specific guidelines for Discretionary Portfolio Management

Within the Discretionary Portfolio Management (DPM) service concept, ABN AMRO Bank N.V. (hereinafter ABN AMRO) manages the customer's portfolio. Before we place an order, we will check whether the order is suitable for the investment customer and whether the order is in line with the investor profile objectives.

Specific guidelines for Advice

Within the Advice service concept, ABN AMRO offers the customer personalised recommendations with a view to a transaction (buying and selling). We only want to recommend investment products that are suitable for the customer. It is not allowed to recommend products that are unsuitable for the customer.

ABN AMRO's assessment of the investment products' suitability takes into account:

(i) The customer's investment objectives and horizon

(ii) The customer's financial position

(iii) The customer's financial capacity and willingness to take risks

(iv) The customer's knowledge and experience in terms of all investments

From January 2018, the customer will receive a document with every recommendation we offer and before any order is entered. This document will show whether the order or recommendation is suitable for the stated investment objectives and risk profile. It allows the customer to see whether the order that is about to be placed is suitable and appropriate. The document also offers more insight into the applicable charges and taxes for the relevant order.

Specific guidelines for Execution Only

Within the Execution Only service concept, the customer is in complete control and ABN AMRO only handles the professional, speedy execution of the transactions. Once the order is executed, we send the customer information on the product's suitability for the investor profile and on the product itself in some cases.

Other MiFID aspects (applicable to all service concepts)

Optimal order execution

One of the basic MiFID principles is the best execution of orders. This means that the financial intermediary has to take all reasonable steps to ensure the optimal execution of orders. 

The ABN AMRO order execution policy determines the criteria that are decisive in this regard. As a customer, you have the option to give specific instructions that may cause ABN AMRO to deviate from its order execution policy. If this is the case, the customer will be informed that the application of the principle of optimal execution cannot be guaranteed. A full summary of the current ABN AMRO order execution policy is available here

Under MiFID II, we now also publish the Best Execution report on our website every year. This report provides an overview of the top 5 markets where the highest number of orders was executed.

Information to customers

MiFID emphasises that all communication to customers must be timely, transparent, clear and non-misleading. The communication includes all information the customer needs to assess the risks, the expected charges and the return of each proposed product or service.

The bank will inform its customers of the execution of orders and the underlying transactions, the valuation of the financial instruments and the customers' capital held by the bank.

The customers will be fully and regularly informed on the provided products and services. The directive provides specific rules for this report, both in terms of content and frequency:

  • The customers must receive an execution confirmation. 
  • The customers will receive a summary of their assets at least once a year with more transparency in terms of charges and taxes.
  • The customer will be informed if the value of the customer's investment portfolio falls by more than 10% since the previous report.

Information to the regulator

Financial institutions must provide more detailed reports to the regulator from 3 January 2018. The objective is the promotion of market transparency. This also means that ABN AMRO will report all security transactions to the regulator.

General Terms and Conditions

Our General Banking Terms and Conditions include various aspects of the MiFID directives. You can read the document by clicking here.

Any questions?

Do not hesitate to contact your ABN AMRO contact person. He or she will be happy to assist.

Febelfin Brochure: MiFID II: What will change for me?