The Investment Intermendiaries Act 1995 (IIA) transposed the EU’s Investment Services Directive of 1993 into Irish law. The purpose of the ISD is to allow investment services to be offered cross-border in a single European market. To achieve this, a considerable amount of definitions, regulatory parameters and home country authorisation requirements were included in legislation. As the Central Bank explains, ‘Whether a firm is required to be authorised (i.e., an investment business firm) or not under the IIA depends on the investment advice or investment business services which it intends providing and the investment instruments which are part of that service. A fundamental facet of the legislation is that the services must be provided to third parties on a professional basis. Hence, firms providing services to other members within their groups are excluded.’
Investment business firm
Any person, other than a member firm within the meaning of the Stock Exchange Act, 1995, who provides one or more investment business services or investment advice to third parties on a professional basis and for this purpose where an individual provides an investment business service and where that service is carried on solely for the account of and under the full and unconditional responsibility of an investment business firm or an insurance undertaking or a credit institution or member firm (within the meaning of the Stock Exchange Act, 1995) that activity shall be regarded as the activity of the investment business firm, insurance undertaking or credit institution or member firm (within the meaning of the Stock Exchange Act, 1995) itself.
Investment advice
‘Investment advice’ means the giving, or offering or agreeing to give, to any person, advice on the purchasing, selling, subscribing for or underwriting of an investment instrument or on the making of a deposit or on the exercising of any right conferred by an investment instrument to acquire, dispose of, underwrite or convert an investment instrument or deposit or the giving, or offering or agreeing to give, to any person, advice on choice of a person providing investment business services, but does not include’, the Act then goes on to list:
• advice in media outlets, publications and broadcasts, where the principal purpose of the publication or broadcast is not to lead persons to invest;
• advice in lectures and seminars;
• corporate finance and business strategy advice
• advice ancillary to other services where the advice is not remunerated separated from other advice.
Investment business services
‘Investment business services’ includes all or any of the following services:
(a) receiving and transmitting, on behalf of investors, of orders in relation to one or more investment instruments;
(b) execution of orders in relation to one or more investment instrument, other than for own account;
(c) dealing in one or more investment instrument for own account;
(d) managing portfolios of investment instruments or deposits in accordance with mandates given by investors on a discretionary client-by-client basis where such portfolios include one or more investment instrument or one or more deposit;
(e) underwriting in respect of issues of one or more investment instrument or the placing of such issues or both;
(f) acting as a deposit agent or deposit broker;
(g) the administration of collective investment schemes, including the performance of valuation services or fund accounting services or acting as transfer agents or registration agents for such funds;
(h) custodial operations involving the safe-keeping and administration of investment instruments;
(i) acting as a manager of a designated investment fund within the meaning of the Designated Investment Funds Act, 1985.’
Investment instruments
‘Investment instruments’ includes -
(a) transferable securities including shares, warrants, debentures including debenture stock, loan stock, bonds, certificates of deposits and other instruments creating or acknowledging indebtedness,
(b) non-transferable securities creating or acknowledging indebtedness issued by or on behalf of a government, local authority or public authority,
(c) units or shares in undertakings for collective investments in transferable securities within the meaning of European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989), and any subsequent amendments thereto, units in a unit trust, shares in an investment company, capital contributions to an investment limited partnership,
(d) financial futures contracts, including currency futures, interest rate futures, bond futures, share index futures and comparable contracts,
(e) commodity futures contracts,
(f) forward interest rate agreements,
(g) agreements to exchange payments based on movements in interest rates, currency exchange rates, commodities, share indices and other investment instruments,
(h) sale and repurchase and reverse repurchase agreements involving transferable securities,
(i) agreements for the borrowing and lending of transferable securities,
(j) certificates or other instruments which confer all or any of the following rights, namely -
(i) property rights in respect of any investment instrument referred to in paragraph (a) of this definition; or
(ii) any right to acquire, dispose of, underwrite or convert an investment instrument, being a right to which the holder would be entitled if he held any such investment to which the certificate or instrument relates; or
(iii) a contractual right (other than an option) to acquire any such investment instrument otherwise than by subscription,
(iv) a rolling spot foreign exchange contract,
(k) options including -
(i) options in any instrument in paragraphs (a) to (j) of this definition, or
(ii) currency, interest rate, commodity and stock options including index option contracts,
(iii) a tracker bond or similar instrument,
(l) hybrid instruments involving two or more investment instruments, and includes any investment instrument in dematerialised form, but this definition shall not be construed as applying to -
(i) any instrument acknowledging or creating indebtedness for, or for money borrowed to defray, the consideration payable under a contract for the supply of goods or services; or
(ii) a cheque or other similar bill of exchange, a banker’s draft or a letter of credit; or
(iii) a banknote, a statement showing a balance in a current, deposit or savings account or (by reason of any financial obligation contained in it) to a lease or other disposition of property, or an insurance policy;’ |
