The realm of financial services is replete with complexities, particularly when it comes to the issuance of financial instruments. The European Markets in Financial Instruments Directive (MiFID 2 as amended) provides a legal framework that governs the issuance business, a term that encapsulates the issuance of financial instruments for one's own risk or the assumption of equivalent guarantees. This article aims to elucidate the intricacies of the issuance business as delineated in MiFID, with a focus on the scope, exceptions, and the obligations that come with it.

The Scope of Emission Business

Definition and Legal Framework

The issuance business is defined as the act of taking on financial instruments for one's own risk for the purpose of placement, or the assumption of equivalent guarantees. The term "financial instruments" is inclusive of a broad range of assets such as equities, debt securities, and derivatives, among others, as per MiFID.

The term "placement" in the context of emission business refers to the act of introducing financial instruments into the capital market or to a limited circle of individuals or investors as part of an issuance. This term implies that only activities involving a "placement agreement" are covered. A "placement agreement" is an arrangement in which the issuer entrusts one or more entities with the task of placing the financial instruments either in the capital market or to a restricted group of people, commonly known as an "underwriting contract."

Furthermore, the method of placement is irrelevant to the definition of emission business. It does not matter whether the financial instruments are introduced through a public placement or a private placement.

Types of Issuance Activities

  • Firm Commitment Underwriting: This usually involves a consortium of companies committing to acquire a portion of the financial instruments being issued at a predetermined price, thereby assuming the sales risk.
  • Options Consortium: In this case, companies may commit to a part of the issuance while reserving an option for the remaining instruments to be placed, especially when there are uncertain placement expectations.
  • Guarantee Consortium: Companies may also assume guarantees that are economically equivalent to a firm underwriting commitment.


The issuance business does not cover issuances, where the issuing company does not require third-party assistance for the placement of its financial instruments but issues the instruments itself, in its own name and for its own account.

Regulatory Requirements and Exceptions

Licensing Requirements

Any entity intending to conduct the issuance business must obtain a license as an investment firm by the competent national supervisory authority. The requirement applies irrespective of the legal form of the entity.


Certain exceptions to the licensing requirement exist. Notably, companies that engage exclusively in the issuance of financial instruments for their parent companies, their subsidiaries or other subsidiaries of their parent company, are exempt from providing an investment or financial service requiring licensing.

Conclusion and Key Takeaways

MiFID provides a comprehensive legal framework that governs the issuance business in Europe. Understanding the nuances of this regulation is crucial for companies and financial institutions that engage in the issuance of financial instruments. Failure to comply with the regulatory requirements could result in severe legal repercussions.

Source: BaFin Factsheet Issuance Business

Executive Summary:

  • MiFID defines the issuance business as the assumption of financial instruments for own risk for placement or the assumption of equivalent guarantees.
  • Types of issuance activities include firm commitment underwriting, options consortium, and guarantee consortium.
  • Licensing from the competent national supervisory authority is mandatory for conducting issuance business, with certain exceptions.
  • The issuance business does not cover self-emission or own-emission cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.