MiFID II introduces new requirements for the management body and requirements for firms to be compliant with CRD IV.
Responsibilities of the management body in the area of:
- the identification, definition and review of the strategic objectives, risk strategy and internal governance of the firm.
- the approval of its internal organisation, including criteria for selection and training of personnel.
- effective oversight of senior management.
- the definition of the policies governing the provision of services and activities, including the remuneration of sales staff and the approval of new products for distribution.
New requirement on remuneration, building on the ESMA Guidelines on remuneration policies and practices published in June 2013:
- Obligation to have a remuneration policy for persons involved in providing services to clients.
- Obligation to prevent conflicts of interest arising from the remuneration and incentives structures.
- Prohibition of remuneration and sales targets which provide an incentive for recommending or selling a particular financial instrument when another one may better meet the client's needs.
New requirement concerning the recording of telephone conversations or electronic communications:
- Obligation to take all reasonable steps to record telephone conversations and electronic communications that result or may result in client orders and transactions when dealing on own account.
- Obligation to notify the client, in advance, that the conversations are recorded.
- Obligation to keep the records for 5 years and to provide them to the client upon request.
MiFID II now requires that all Member States allow firms to appoint tied agents. The possibility to allow these tied agents to handle client money or financial instruments is left at their discretion.