A Differentiated Approach to Client Protection : The Example of MiFID

In this contribution to the June 2010 SECOLA conference in Istanbul on "The Failure of Contracting: Financial Crisis, Financial Services and General European Contract Law", we analyze the system of differentiated client protection under the EU Markets in Financial Instruments Directive (“MiFID”), and compare this regime to the approach used by standard private law.We provide context and background on the genesis of the MiFID client categorization system, and describe its black letter content in detail. We also make an inventory of all MiFID conduct of business rules that differentiate between professional and retail clients. We then analyze to what extent this regulatory system differs from the way in which investor protection is to be differentiated based on general principles of private (contract or tort) law