MiFID I

Since 01.11.2007, provisions of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments are applicable (hereinafter referred to as MiFID I).

Objective of MiFID I is to establish integrated financial market, ensuring efficient protection for investors and general effectiveness and integrity of the market. In the Republic of Latvia, MiFID I is mainly implemented via amendments to the Financial Instrument Market Law of 08.11.2007.

MiFID I regulates rendering of services by investment brokerage companies and credit institutions that provide investment services (hereinafter referred to as investment service providers).

One of the major innovations introduced by MiFID I is classification of customers. Pursuant to MiFID I, before rendering of investment services, investment service providers have to assign each customer one of the following statuses: retail customer, professional customer, or eligible counterparty. The status is assigned on the basis of the customer's previous experience and knowledge of financial instruments, as well as peculiarities of the customer's operations. The customer’s status determines specific details of rendering investment services, including conditions of executing the customer’s orders, applicable information disclosure, conditions of custody, and appropriate customer protection. All customers performing transactions in financial instruments are informed about the status assigned to them by the investment service provider. Pursuant to the regulatory enactments of the Republic of Latvia, customers assigned the status of retail customers are ensured the highest protection of their interests, since retail customers are considered to have less experience and knowledge of the investment area.

The customer may demand that investment service provider assigns another status to the customer. The status of retail customer can be changed to the status of professional customer. Before assigning the professional customer status, the investment service provider will supply the customer with written notification on losing the rights to investor protection. The status of professional customer can be assigned with regard to investment services in general or with regard to particular transaction or financial instrument. Professional customers can have their status changed to that of retail customer or eligible counterparty. The status of eligible counterparty can be changed to the professional or retail customer status.

New legislative requirements as of 03.01.2018.

Since 03.01.2018, provisions of Directive 2014/65/EC of the European Parliament and of the Council on markets in financial instruments (hereinafter referred to as MiFID II) and Regulation No. 600/2014 (hereinafter referred to as MiFIR) are applicable.

The new requirements are largely based on the existing conditions that were introduced by the MiFID I and are aimed at improving the efficiency of the functioning of financial markets, including on such attributes as their transparency and system stability.

One of the requirements of MiFID II / MiFIR for legal entities, regardless of their country of residence, is the availability of a unique international code — the LEI code (Legal Entity Identifier). The LEI code will be required for the legal entity to make any transactions with any type of financial instruments, incl. shares, bonds, etc.

The LEI code is a unique 20-digit, alphanumeric code that identifies each legal entity participating in financial markets as one of the parties to a transaction.

It is possible to obtain the LEI code from particular registration authorities.

The current list of endorsed authorities for registration of the LEI codes is available here: www.leiroc.org.

The LEI code registration procedure may take up to two weeks. A charge may be collected for registration and maintenance of the LEI code.

We are ready to assist our clients in obtaining the LEI code as well as in meeting other EMIR requirements.