MiFID II: Restrictions in the regulation of investment intermediaries

New restrictions in the business of investment intermediaries were introduced by an amendment of the Capital Markets Act with the effects as of 1 January 2018.

The investment intermediary is a local license, established as local exception from the MIFiD rules on investment mediation. The license was very popular among smaller businesses as it enables to provide a limited scope of investment services with lower regulatory requirements and initial costs.

As part of the implementation of the MiFID II. directive, potential business opportunities of investment intermediaries were significantly reduced. From 1 January 2018, investment intermediaries may only provide investment advice and submit/receive orders to banks and brokers. Also, they are only allowed to deal with a limited scope of instruments, which no longer includes shares and bonds without a prospectus.

In addition, the amendement imposes additional formal obligations and requirements corresponding to those of securities brokers (EU harmonised license). The license must be renewed on a yearly basis upon a payment of additional administrative fees.