A comprehensive regulatory framework for the execution of transactions on behalf of investors by stock markets, alternative trading systems and investment firms has been established under Directive 2004/39/EC of the European Parliament and of the Council on Markets in Financial Instruments (the Mifid) and Directive 2000/12/EC of the European Parliament. A single passport for investment firms, banks and stock markets has been created that enables these institutions to offer their services on a cross-border basis throughout Europe on the strength of home-country authorization, granted on the basis of uniform criteria in all member states.
The Mifid obliges member states to harmonize local legislation to give effect to its main objectives, which are to protect investors and consumers of investment services, develop a single market in investment services across the EU, protect market integrity, and promote fair and transparent integrated financial markets.
National legislation implementing the Mifid is under consideration by the Cyprus House of Representatives and should be adopted by November 1 2007. The draft legislation also incorporates other EC Directives, including Directives 2006/73/EC concerning the Organizational Requirements and Operating Conditions for Investment Firms and 2006/48/EC on the Taking and Pursuit of the Business of Credit Institutions. When passed, the new law will replace the existing Investment Firms Law of 2002.