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Financial instrument: Difference between revisions
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{{a|mifid2|[[File:Stradivarius.jpg|450px|frameless|center]]}}{{d|Financial instrument|/fɪˈnanʃ(ə)l ˈɪnstrʊm(ə)nt/|n|}} | {{a|mifid2|[[File:Stradivarius.jpg|450px|frameless|center]]}}{{d|Financial instrument|/fɪˈnanʃ(ə)l ˈɪnstrʊm(ə)nt/|n|}} | ||
Colloquially, a contract creating financial liabilities between two parties. It can, but need not, be [[negotiable]], but its main feature — its ''[[sine qua non]]'' — is that it cannot be [[Issuance|created]], [[paying agent|maintained]], [[investment manager|managed]], [[Custody|looked after]], [[Broker-dealer|transferred]], [[Securitisation|monetised]] or [[Redemption|redeemed]] — it cannot move or breathe, in other words — except through the [[Agency problem|agency]] of someone who will deduct a fee from the proceeds of your investment for the privilege. | Colloquially, a contract creating financial liabilities between two parties. It can, but need not, be [[negotiable]], but its main feature — its ''[[sine qua non]]'' — is that it cannot be [[Issuance|created]], [[paying agent|maintained]], [[investment manager|managed]], [[Custody|looked after]], [[Broker-dealer|transferred]], [[Securitisation|monetised]] or [[Redemption|redeemed]] — it cannot move or breathe, in other words — except through the [[Agency problem|agency]] of someone who will deduct a fee from the proceeds of your investment for the privilege. | ||
==MiFID== | ==MiFID== | ||
A whole world of [[tedium]] under [[MiFID II]]. Defined as follows — | A whole world of [[tedium]] under [[MiFID II]]. Defined, as “those instruments specified in Section C of Annex I” which are as follows — | ||
{{quote|{{financial instruments}}}} | {{quote|{{financial instruments}}}} | ||
===Points to note=== | ===Points to note=== | ||
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{{quote|{{derivativecontractdefinition}}}} | {{quote|{{derivativecontractdefinition}}}} | ||
Details fiends will note the rather lovely circularity here, for each of the limbs (other than | Details fiends will note the rather lovely circularity here, for each of the limbs (other than “financial contracts for differences”) employs the expression “[[derivative contract]]”. Could something that falls outside the scope of paras 4-10, but also arguable falls within it — a transferable security with an embedded derivative, like a [[credit-linked note]], for example — count as a “[[derivative contract]]”? The [[European Commission]] draftspersons are occasionally cavalier in their looseness with words you wish they’d been careful about. Unintended consequences hover over either interpretation. | ||
===what ''isn’t'' a {{t|MiFID}} financial instrument=== | ===what ''isn’t'' a {{t|MiFID}} financial instrument=== | ||
A good place to look (if your interest level counts as “fiendish”) is the snappily titled ''Commission Delegated Regulation {{eureg|2017|565|EU}} of 25 April 2016 supplementing Directive {{eudirective|2014|65|EU}} of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive''. | A good place to look (if your interest level counts as “fiendish”) is the snappily titled ''Commission Delegated Regulation {{eureg|2017|565|EU}} of 25 April 2016 supplementing Directive {{eudirective|2014|65|EU}} of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive''. | ||