The purpose of this chapter is to help a UK person consider:
- • the meaning of investment services and/or activities;
• what a financial instrument is;
• the meaning of investment firm as defined in the Regulated Activities Order, which is the basis of the disapplication by article 4(4) of those regulations of various Regulated Activities Order exclusions in the case of investment firms and is used for various other purposes in those regulations;
• the definitions of investment firm in MiFIR, investment firm, MIFIDPRU investment firm and MiFID investment firm;
• whether it is carrying on an ancillary service; and
• how a firm’s permissions correspond to related investment services and/or activities.
Background
One of the main original purposes of this chapter was to explain whether a UK firm fell within the scope of the UK provisions which implemented the Markets in Financial Instruments Directive 2014/65/EU (‘MiFID’) and therefore was subject to the requirements derived from it. That Directive no longer applies in the UK but its terminology remains relevant to an understanding of the application of the matters discussed in this chapter.
MiFID replaced the Markets in Financial Instruments Directive 2004/39/EC (MiFID 1), which in turn replaced the Investment Services Directive (ISD).
The definitions and statutory provisions discussed in this chapter are based on (but with changes) MiFID as supplemented and expanded by the EU MiFID Org Regulation, as implemented in the UK prior to IP completion day.
While these EU provisions no longer apply in the UK, we have retained the references in this chapter, and its annexes, to the provisions in MiFID and other relevant directives such as the CRD, the UCITS Directive and the AIFMD for ease of reference. As a result, where the context requires, any references to a directive, its articles or recitals, which could be read as having continuing effect, should be read as a reference to the UK provisions which implemented that directive or the relevant article.
In the FCA’s view, the recitals to MiFID and other EU legislation discussed in this chapter can still be useful in interpreting a term defined in the Regulated Activities Order or other UK legislation where the drafting of that term in the UK legislation closely follows the drafting in MiFID or that other EU legislation. This chapter therefore refers to such recitals in appropriate places.
This chapter does not address the question of whether an investment firm providing investment services and/or activities is providing an investment service as opposed to carrying on an investment activity.
CRD IV [deleted].
How does this document work?
This document is made up of Q and As divided into the following sections:
• General (PERG 13.2);
- • Investment services and activities (PERG 13.3);
- • Financial instruments (PERG 13.4);
- • Exemptions from the definition of investment firm (PERG 13.5); and
- • Flow charts, tables and lists (PERG 13 Annex 1 and PERG 13 Annex 2.)
We have also included guidance in the form of flow charts to help a firm decide whether it is a MiFID investment firm and whether article 4(4) of the Regulated Activities Order applies, as well as permission maps indicating which regulated activities and specified investments correspond to investment services, activities and financial instruments (see PERG 13 Annex 1 and PERG 13 Annex 2).
Article and recital references to EU legislation are to MiFID (Level 1 measures) unless otherwise stated. References to categories of investment services and activities and financial instruments in EU legislation refer to Annex 1 MiFID: for example, A1 refers to "reception and transmission of orders in relation to one or more financial instruments" and C1 relates to "transferable securities".