How to use MiFID Regulations

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How to use MiFID Regulations

Description Learn how Pega CLM uses KYC Questionnaires to help financial institutions handling MiFID obligations.
Version as of 8.7
Application Pega Client Lifecycle Management for Financial Services
Capability/Industry Area Financial Services


The Markets in Financial Instruments Directive (MiFID) is a European Union legislation – introduced in 2004 with Directive 2004/39/EC, replaced later by Directive 2014/65/EU (commonly known as MiFID 2) which came into force in 2018 – that requires investment firms and banks operating in the EEA1 financial markets to:

  • Provide a high degree of transparency in the investment services offered to facilitate fair competition by ensuring a set of common standards and rules.
  • Protect investors by categorising customers depending on their financial situation as well as on their experience and knowledge in the investment field.

MiFID also sets out other requirements, such as standardising the regulatory disclosures and reporting to the relevant authorities.

In terms of financial instruments covered by MiFID, the initial list (see letter C of Annex I of Directive 2004/39, which included amongst others: transferable securities; money-market instruments; options, futures, swaps, forward rate agreements having certain characteristics) has been expanded by MiFID 2 to include certain Over The Counter (OTC) derivatives.

1 The European Economic Area (EEA) consists of not only the EU member states (i.e., Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, the Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden) but also Iceland, Liechtenstein, Norway, and United Kingdom.

Scope of MiFID regulations supported in CLM[edit]

CLM supports with questionnaires – one for entities and one for individuals – the MiFID obligations related to:

  1. Product categorization.
  2. Determination of the MiFID category the customer belongs to.
  3. The request from the customer to be assigned a different category; this is the so called opt-down/opt-up process.
  4. The suitability and appropriateness of the investment for the customer.

The customer categorization (points 2 and 3 above) has a dual goal:

- Regulatory protection

The level of protection afforded to each group is inversely proportional to their financial knowledge, experience, and expertise.

Therefore, Eligible Counterparties (which include, among others, investment firms, credit institutions, and insurance companies) are provided the least protection, while Retail clients – considered to be investors with lower financial capabilities – are provided the highest.

- Products/services offering

Based on their categorisation, customers are provided with different products and services as well as varying levels of information necessary to understand details and risks of a transaction.

Furthermore, it is worth noting that during a review of an existing customer file (for example, Periodic Review and Event Driven Review), the user has the ability to re-categorise the customer. Re-categorisation reasons include but are not limited to incorrect categorisation, or an entity becoming regulated or de-regulated.


Out-of-the-box, CLM triggers the displaying of the MiFID questionnaire when:

  1. ‘Investment services' and activities (“core” services) and/or ‘ancillary services’ (“non-core” services) are provided2
  2. The combination of the following three factors is as per the table below.
    • The Registered address country/Nationality of the customer.
    • The EEA status of the financial institution offering the product.
    • The booking location of the product.
The images gives information on the Registered address, Nationality, and EEA status.
Customer and product related circumstances

2 The assumption is that the list of products used by the financial institution contains the MiFID flag.

How and where to configure triggers[edit]

You can configure the applicability logic for MiFID questionnaires using the ‘ApplicabilityMatrix’ decision table. For information on general configuration of this rule, see the 'Applicability matrix' section of the implementation guide.

The other important decision logic rule is the ‘ApplyMIFIDCaseWhen’ When rule.

KYC applicability matrix
MiFID KYC applicability matrix

Implementations based on CLM 8.5 or earlier versions use the ‘ProdRegulationsMasterAppliesWhen’ decision table. This also uses the main decision logic in the ‘ApplyMIFIDCaseWhen’ When rule.

Prod regulations master applies when
MiFID Prod regulations master applies when

You need to configure the specific MiFID applicability logic for your financial institution in the above-mentioned rules.