What is a specified investment under MIFID?

Under MiFID (Markets in Financial Instruments Directive), a specified investment refers to financial instruments that are subject to the directive’s regulations aimed at enhancing investor protection and market transparency. Shares and depository receipts are included because they are classified as financial instruments that can be traded in markets.

Shares represent ownership in a company and are securities that can be bought and sold on an exchange, making them a key component of investment portfolios. Depository receipts, such as American Depository Receipts (ADRs), represent shares in a foreign company but are traded in the domestic market in a manner similar to regular shares. Both categories fall within the purview of MiFID, which is concerned with how these instruments are managed, marketed, and conducted in transactions to ensure both investor security and market integrity.

In contrast, investments like insurance contracts and personal pensions generally have different regulatory frameworks and may not be categorized under specified investments in the same manner, given their distinct nature and goals. Funeral plans are also not considered specified investments under MiFID, as they do not fit within the financial instruments that MiFID regulates.