MIFID II - Overview and FAQs

MiFID II covers Financial Services businesses operating anywhere in the European Economic Area ('the EEA') and addresses a number of weaknesses identified during the financial crisis.

MiFIID II

Overview

On 3 January 2018, the revised Markets in Financial Instruments Directive (MiFID) and Markets in Financial Instruments Regulation (MiFIR), together "MiFID II", will come into force. MiFID II covers Financial Services businesses operating anywhere in the European Economic Area ('the EEA') and addresses a number of weaknesses identified during the financial crisis. It introduces greater protection for investors and seeks to make financial markets in Europe more resilient, transparent and investor-friendly.

Frequently Asked Questions

1. What benefits can I expect to see from the new legislation?
2. What can I expect to see change as a result of MiFID II?
3. Will I be required to provide additional information to the bank?
4. I have been a client for many years and I am comfortable that I understand your costs and charges. Can I opt-out from having to receive this additional pre-trade documentation?
5. Does the new cost and charges information disclosure apply to all instruments and products that I may trade?

We have outlined more information below regarding the key changes and impacts of MiFID II.

Frequently Asked Questions

1. What benefits can I expect to see from the new legislation?

MiFID II places higher standards on how we, together with other investment firms, conduct business with our clients. This specifically relates to;

  • The quality of financial advice we provide to you and how we assess the suitability of the advice we give, including giving you a letter outlining this assessment.
  • Additional information on the costs and charges you will incur relating to the services we provide as well as the costs associated with the investments and products you buy and sell.

2. What can I expect to see change as a result of MiFID II?

From 3rd January 2018, before you place a market order with us, or before you sign-up to one of our managed services, we will provide you with additional documentation which will clearly explain the costs and charges which you can expect to pay. The aim is to provide you with a deeper understanding of the costs, so that you can make an informed decision on whether to proceed. You will also receive an annual statement which will summarise the total costs and charges that you have paid for the services received and transactions undertaken during the preceding 12 month period.

In addition, if we provide you with a personal recommendation to buy, hold or sell an investment, we will provide you with a suitability report explaining why we believe this recommendation is suitable for you, even if this does not result in an investment transaction.

If you receive ongoing advisory or discretionary management services, a periodic suitability report will be provided to you explaining the ongoing suitability of your investments. In addition, we will notify you if the value of your discretionary portfolio depreciates by 10 per cent and thereafter by multiples of 10 per cent for your awareness.

To provide greater transparency, we will also have the obligation to publish an annual report in April each year, demonstrating how we have achieved best execution for the orders that we execute for our clients and the market venues and brokers where these trades have been executed. This report will be available on the HSBC Private Bank website.

3. Will I be required to provide additional information to the bank?

As a result of the new regulations we may need to ask you to provide us with additional information in respect of your investment profile. For example, MiFID II is expanding the scope of products which are considered to be "complex" and as a result we may need to ask you about your investment knowledge and experience in these products in order that we have sufficient information to be able to assess whether a transaction is appropriate for you. We may also be required to update the information within your investment profile using data you have already provided to us and as a result, we may need to request confirmation of the updated information.

4. I have been a client for many years and I am comfortable that I understand your costs and charges. Can I opt-out from having to receive this additional pre-trade documentation?

In order to provide greater transparency on the costs and charges that you will pay on your investments and the investment services, we have an obligation to provide disclosure information about the aggregated costs and charges related to your investment and service. The documentation will be sent by your preferred delivery channel (mailing or e-mail) and for all FX, Fixed Income and Equities transactions, a generic illustration will be provided upfront for convenience and to avoid any delay in execution.

5. Does the new cost and charges information disclosure apply to all instruments and products that I may trade?

The new cost and charges information disclosure covers a wide range of products offered by HSBC Private Bank with the exception of FX Spot, Precious Metals, Insurance products and Cash Deposit products.

For more information please download the MIFID II - Costs and Charges Information guide available in a PDF format (1.9MB, PDF) or speak with your Relationship Manager or Investment Counsellor.

The HSBC Group is one of the largest banking and financial service organisations in the world.

Legal Information

The information on this site refers to services or products which are not available in certain locations, or which, in any relevant location, may have components, methods, structures and terms different from the ones described, as well as restrictions on client eligibility. Please contact a Relationship Manager for details of services and products that may be available to you.

The use of the label ‘HSBC Private Bank’, ‘we’, or ‘us’ refers to HSBC’s worldwide private banking business, and is not indicative of any legal entity or relationship.

This information is entirely qualified by reference to the terms and conditions of the specific service, if any, provided by the relevant HSBC company.

Nothing here is to be deemed an offer, solicitation, endorsement, or recommendation to buy or sell any general or specific product, service or security and should not be considered to constitute investment advice.

Please note that HSBC Private Bank does not provide Legal and Tax Advice.

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