What Are the Business Implications of MiFID?
To understand MiFID in more detail and its implications for business, let us look at its individual directives/articles and their impact on business processes: Investor Protection Protecting the interests of the investor is at the heart of MiFID. The Suitability Test (Article 9(4)) ensures that where an organization provides advice or recommendations (e.g., portfolio management), such advice has been checked for its suitability given the background and aims of the client. The onus (as always with MiFID) is on the supplier of such services to prove that such checks have been carried out and recorded. Based on the Suitability Test, each client will be categorized (the main categories being retail and professional). Such categories are used as a basis in MiFID for deciding whether certain products or services are made available to the client. This is known as the Appropriate Test (Article 19(5)). Companies are also obliged to identify and minimize areas of conflict between themselves and
