MiFID II and MiFIR Records of Services, Activities, Orders and Transactions (Article 16(6) and MiFIR Article 25)

Article 4(1), point (1), of Directive 2014/65/EU defines an investment firm as any legal person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis.

Article 16(6) of Directive 2014/65/EU requires an investment firm to arrange for records to be kept of all services, activities and transactions undertaken by it, sufficient to enable the competent authority to fulfil its supervisory tasks and to perform the enforcement actions under the Directive, Regulation (EU) No 600/2014, Directive 2014/57/EU and Regulation (EU) No 596/2014.

The records must be sufficient in particular to ascertain that the investment firm has complied with all obligations, including those with respect to clients or potential clients and to the integrity of the market. Article 16(6) requires records of the services, activities and transactions themselves and states no duty to explain the reasoning behind a decision.

Article 25(1) of Regulation (EU) No 600/2014 requires an investment firm to keep at the disposal of the competent authority, for five years, the relevant data relating to all orders and all transactions in financial instruments which it has carried out, whether on own account or on behalf of a client. For a transaction carried out on behalf of a client, the records must contain all the information and details of the identity of the client and the information required under Directive 2005/60/EC.

Article 66 of Directive (EU) 2015/849 repealed Directive 2005/60/EC with effect from 26 June 2017 and provides that references to the repealed Directive are to be construed as references to Directive (EU) 2015/849. Article 25(1) provides that the European Securities and Markets Authority may request access to that information in accordance with the procedure and under the conditions set out in Article 35 of Regulation (EU) No 1095/2010.

Article 25(2) of Regulation (EU) No 600/2014 separately requires the operator of a trading venue to keep at the disposal of the competent authority, for at least five years, the relevant data relating to all orders in financial instruments which are advertised through its systems.

Article 1, point (7), of Directive (EU) 2016/1034 replaces in Article 93(1) of Directive 2014/65/EU the date for adopting and publishing the transposing measures, 3 July 2016, with 3 July 2017, and the date for applying them, 3 January 2017, with 3 January 2018. Article 1, point (14), of Regulation (EU) 2016/1033 replaces the second paragraph of Article 55 of Regulation (EU) No 600/2014 with the provision that the Regulation applies from 3 January 2018.

Article 70(3), point (a), of Directive 2014/65/EU lists Article 16(1) to (11) among the provisions an infringement of which Member States shall regard at least as an infringement of the Directive. Article 70(3), point (b), of that Directive lists Article 25(1) and (2) of Regulation (EU) No 600/2014 among the provisions an infringement of which Member States shall regard at least as an infringement of that Regulation.

Article 70(1) requires Member States to lay down rules on, and ensure that their competent authorities may impose, administrative sanctions and measures applicable to all infringements of the Directive.

Article 70(6) requires Member States to give competent authorities the power to impose at least maximum administrative fines of at least EUR 5,000,000 on a legal person, or of up to 10% of its total annual turnover, of at least EUR 5,000,000 on a natural person, and of at least twice the amount of the benefit derived from the infringement where that benefit can be determined, so the amounts are floors for the maximum fines that Member States must make available and not fines that the Directive imposes on a firm directly.