5.V.1.2.3 MiFID II investment firms

MiFID II states that ‘investment firms’ are subject to the MiFID II share trading-obligation (provided all conditions of the share trading-obligation are met).1 Investment firms are a defined term under MiFID II2 and require MiFID II authorization.3 In effect, the MiFID II share trading-obligation applies to MiFID II investment firms (i.e. as authorised under MiFID II). ESMA has provided guidance in relation non-EU branches of MiFID II investment firms. ESMA states that transactions by non-EU branches of EU (MiFID II) investment firms are treated as transactions of the EU parent company.4 The reason here is that a branch – in contrast to a subsidiary – does not have legal personality. The result is that the MiFID II share trading-obligation also applies to branches of MiFID II investment firms in third countries.5 The risk here is overlapping obligations for branches (i.e. EU and third-country), in particular in relation to Brexit and the non-renewal of equivalence for Switzerland.6 The scope of the MiFID II share trading-obligation, including in relation to third countries, is part of the MiFID II Review (section VII below).