Implementation of MiFID II investor protection provisions by private banks within the European Union
| DOI | https://doi.org/10.1108/JFRC-10-2021-0087 |
| Published date | 11 April 2022 |
| Date | 11 April 2022 |
| Pages | 1-15 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation |
| Author | Tom Loonen,Ronald Janssen |
Implementation of MiFID II
investor protection provisions by
private banks within the
European Union
Tom Loonen
School of Business and Economics, VU University, Amsterdam, The Netherlands, and
Ronald Janssen
Solution Owner Goal Based Planning, ORTEC Finance, Rotterdam, The Netherlands
Abstract
Purpose –With the introduction of the Markets in Financial Instruments Directive (MiFID), financial
institutions are faced with many investor protection provisions; this has a major impact on the day-to-day
operations of private banks, which provide investment services to predominately retail or non-professional
investors.The purpose of this paper is to determine how MiFID provisions regarding investorprotection with
respect to suitabilityare complied with in practice by private banks.
Design/methodology/approach –Based on interviews with 25 representatives of private banks from
10 different European Union (EU) member states,the researchers have determined how these provisions are
fulfilled and associated risks mitigated.Mapping out the suitability requirements of MiFID and comparing
them with how these have been operationalised, we arrive at the question of whether this leads to a level
playing fieldand investor protection by different private banks.
Findings –Although MiFID is trying to achievea level playing field between the EU member states,this
study shows that this has not been achieved in all areas.Investor protection requirements from MiFID are
interpreted and operationaliseddifferently. Although these differences are sometimes small, sometimesthey
are largerand affect the way the investor is served and suitabilitydetermined.
Originality/value –This research provides a unique insightinto the way private banks in Europe have
implementedthe MiFID II requirements and gives insight into best practices. For the future, this research can
serve as a preludeto in-depth follow-up research on the implementationof EU provisions.
Keywords MiFID, Private banks, European union, Investor protection, KYC, Effectiveness,
Suitability, Investment
Paper type Research paper
Introduction
The Markets in Financial Instruments Directive 2014/65/EU (commonly referred to as
“MiFID II”) undeniably plays an important role in the day-to-day business of banks
© Tom Loonen and Ronald Janssen. Published by Emerald Publishing Limited. This article is
published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce,
distribute, translate and create derivative works of this article (for both commercial and non-
commercial purposes), subject to full attribution to the original publication and authors. The full
terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Authors would like to thank the private banks for their participation and Loes Meulmeester for her
assistance.
MiFID II
investor
protection
provisions
1
Received21 October 2021
Revised7 March 2022
Accepted14 March 2022
Journalof Financial Regulation
andCompliance
Vol.31 No. 1, 2023
pp. 1-15
EmeraldPublishing Limited
1358-1988
DOI 10.1108/JFRC-10-2021-0087
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