MiFID
MiFID stands for Markets in Financial Instruments Directive. It’s an EU regulation designed to make financial markets more transparent, fair, and protective for investors.
Key goals:
- Protect investors.
- Improve transparency of financial products and services.
- Ensure financial firms act in the client’s best interest.
Under MiFID, banks and investment firms must assess whether an investment product is suitable or appropriate for each customer. To do this, they must collect information from the client—this is where the investment questionnaire comes in.
A MiFID questionnaire
The questionnaire typically covers:
- Financial situation: income, assets, ability to bear losses.
- Investment objectives: goals, time horizon, risk tolerance.
- Knowledge and experience: understanding of different investment products.
MiFID requires a formal “suitability assessment.” The answers to the questionnaire allow the firm to create an investment profile, which determines:
- What products the client is allowed or recommended to invest in.
- Whether a product is too complex or risky.
- What level of advice or protection is needed.
MiFID in Harmoney
Harmoney supports multiple configurable elements in order for our customers to be able to send these questionnaires to their counterparties. Subsequently, based on the profile, the necessary advice and products can be shared with the customer.