Cowen Welcomes Ireland's Transposition Of MIFID Rules

by Jason Gorringe, for LawAndTax-News.com, London

23 February 2007

Ireland's Minister for Finance, Brian Cowen, has welcomed the fact that Ireland is one of the first EU member states to fully transpose the Markets in Financial Instruments Directive, or MIFID as it has come to be known.

MIFID harmonises and modernises the EU-wide legislative framework for investment firms, promoting greater cross-border competition and the competitiveness of the EU financial sector overall.

MIFID provides investment firms with an effective “single passport” to provide their services across the EU on the basis of their home country authorisation. It is a key element of the EU’s Financial Services Action Plan, supporting the creation of a single market in financial services.

According to Cowen, Ireland's transposition of the MIFID rules has been achieved with the close assistance of the Financial Regulator and strong co-operation from industry.

Cowen noted that: “Our commitment to maintaining Ireland’s strong performance in the transposition of EU financial services directives is a key element of the Government’s strategy to support the continued development of international financial services in Ireland."

MIFID follows up the 1993 Investment Services Directive (ISD), which was only partly successful mainly because the effectiveness of its “passport” had been undermined by member states being allowed to impose additional consumer protection requirements. Thus at that time, investment firms wishing to trade across the EU had to comply with 15 sets of rules.

The Irish government believes that it is essential investor protection provisions in this area are harmonised and updated across the Union, so that investors can avail of greater competition in investment firms’ services on a cross-border basis.

Another factor behind the need for the MIFID updating was the fact that new services such as investment advice and new financial instruments such as derivatives needed to be brought within the scope of the legislation.

Although the transposing regulations only take effect from 1 November 2007, finalisation at this stage will allow the Irish financial services industry sufficient time to adapt their existing systems. To date only 3 other Member States (Lithuania, Romania and the UK) have transposed this complex Directive.

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