Requirement (MIFID)
Article 19 Use of client financial instruments
Requirements MIFID - DIRECTIVE 2006/73/EC
Description
Description
1. Member States shall not allow investment firms to enter into
arrangements for securities financing transactions in respect of
financial instruments held by them on behalf of a client, or
otherwise use such financial instruments for their own account
or the account of another client of the firm, unless the following
conditions are met:
(a) the client must have given his prior express consent to the
use of the instruments on specified terms, as evidenced, in
the case of a retail client, by his signature or equivalent
alternative mechanism;
(b) the use of that client's financial instruments must be
restricted to the specified terms to which the client
consents.
2. Member States may not allow investment firms to enter into
arrangements for securities financing transactions in respect of
financial instruments which are held on behalf of a client in an
omnibus account maintained by a third party, or otherwise use
financial instruments held in such an account for their own
account or for the account of another client unless, in addition to
the conditions set out in paragraph 1, at least one of the
following conditions is met:
(a) each client whose financial instruments are held together in
an omnibus account must have given prior express consent
in accordance with point (a) of paragraph 1;
(b) the investment firm must have in place systems and
controls which ensure that only financial instruments
belonging to clients who have given prior express consent
in accordance with point (a) of paragraph 1 are so used.
The records of the investment firm shall include details of the
client on whose instructions the use of the financial instruments
has been effected, as well as the number of financial instruments
used belonging to each client who has given his consent, so as to
enable the correct allocation of any loss.
Comment
Applies to Article 13(7) of Directive 2004/39/EC