Regulations – securities trading

Since 2018, the MiFID II and MiFIR regulations have applied to securities markets in the EU.

What does this mean?

Within the EU, there are common rules for securities trading. The rules apply in Sweden and other EU countries.

The rules are based on the EU directive MiFID, Markets in Financial Instruments Directive. MiFID was introduced on 1 November 2007. One aim of the rules is to make it easier to trade securities between different countries.

Since January 2018, protection for securities investors has been strengthened through two sets of regulations: MiFID II and MiFIR. They are based on a review of MiFID and aim to increase transparency on financial markets. This means, among other things, that you should receive clearer information about costs and charges before and after a transaction. The rules are also intended to give you, as an investor, stronger protection.

The customer in focus

The MiFID II and MiFIR regulations focus on the customer’s best interests. For Handelsbanken, this is nothing new, but the rules further strengthen customer protection.

The rules are intended to give you:

A better overview of your costs.
Better information before and after a transaction.
Better protection when you invest.

Requirements for identification codes

Since January 2018, all companies and private individuals trading in securities need a global identification code.

For companies, the code is called a Legal Entity Identifier, or LEI. For private individuals, the code is called a National Client Identifier, or NCI code.

You need an LEI or NCI code in the following cases:

You are going to trade in securities.
You are going to transfer securities.
You are going to take part in certain corporate actions relating to securities you already hold, such as new issues.
You are going to trade exchange-traded funds.

You do not need an LEI or NCI code to trade other mutual funds.

Appropriateness test and target market

Part of the customer protection is that the Bank must make sure that the product you trade is suitable for you. The Bank must also make sure that you belong to the product’s target market.

In the appropriateness test, we check whether you understand the product’s characteristics and risks. We also assess whether you have enough knowledge and experience of the product.

The appropriateness test will be developed with more questions. This gives us a clearer picture of which products are suitable for you.

You will also be offered a document showing which target market the product is intended for.