Part II Investment Firms and Investment Services, 9 Agency and Principal Dealing under MiFID I and MiFID II

Subject(s):

Conduct of business regulation — Enforcement — Investment business — Regulated activities — Regulated persons — Supervision

This chapter examines whether allowing the extent of the protection afforded to an investor under MiFID to be largely dependent on the distinction between dealing on own account on the one hand and trading on behalf of the client (and other forms of investment service) on the other is justified. The author submits that it is not. The distinction between dealing on own account and trading on behalf of the client is tenuous, arbitrary and easy to manipulate. According to the author, MiFID II provides no practicable criterion either, and resorts to the artifice of reclassifying certain types of dealing on own account as acting on behalf of the client. Finally, both the UK Government and the Dutch Supreme Court take the view that duties of care must also apply where an investment firm acts solely as an investor’s contractual counterparty.