Safekeeping and administration of financial instruments
Safekeeping and administering a client's financial instruments, plus the cash and collateral management that goes with it, needs an investment firm licence with the right ancillary permission, or a banking licence, under MiFID II Annex I, Section B(1). The custodian keeps client assets segregated, protects client money and reconciles with central depositaries periodically, then can passport across the EEA.
Definition
Holding financial instruments for clients and related services such as cash and collateral management, as an ancillary service.
- MiFID II, Annex I, Section B(1): official text
Which licence you need
Licence families that typically permit this activity:
- IF · Cyprus
Cyprus Investment Firm (CIF) authorisation
CySEC
- IF · Czech Republic
Investment Firm licence
CNB
- IF · Estonia
Authorisation as an investment firm
FI
- IF · Germany
Investment firm licence
BaFin
- IF · Ireland
Investment Firm Authorisation (MiFID II)
CBI
- IF · Italy
Investment firm licence (SIM)
CONSOB
- IF · Latvia
Investment firm licence
LB
- IF · Lithuania
Financial brokerage firm licence
LB
- IF · Luxembourg
Investment firm authorisation
CSSF
- IF · Malta
Investment services licence (Category 1, 2, or 3)
MFSA
- IF · Netherlands
Investment firm licence
Investment firm licence (Vergunning beleggingsonderneming) under Wft Article 2:96 and MiFID IIAFM
- IF · Poland
Brokerage House licence (dom maklerski)
KNF
- IF · Slovakia
Investment firm licence
NBS
- IF · Spain
AV) investment firm licence
CNMV
Where it can be licensed
Frequently asked questions
Can a standalone firm obtain a licence solely for safekeeping financial instruments?
No. MiFID II classifies safekeeping as an ancillary service under Section B, so a firm cannot be authorised for safekeeping alone. It needs authorisation for at least one core investment service too, order execution or portfolio management, for example.
What asset segregation standards must financial custodians observe?
The custodian's internal books and accounts have to clearly separate client holdings from its own assets. Sub-custody and central securities depository accounts held externally must also identify client ownership, so those securities are protected from creditor claims if the custodian is liquidated.
Sources
- MiFID II Annex I, Section B(1) · retrieved 2026-09-24
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