4.6 Particular Remarks on Securities in the Money Market 121Community law. Due to the diversity of short-term securities and the classes of
instruments negotiated on national money markets, the specific legal nature and
the characteristics of such instruments have largely been left to be regulated by the
Member States.^182
Short-term securities nevertheless raise a number of questions of Community
law. Many Community directives refer to money market instruments. Can the is-
suing of short-term securities therefore be regarded as the taking of deposits and
governed by banking laws? Does the issuing of short-term securities require the
publishing of a prospectus approved by the competent authorities? Is there a duty
of disclosure under the MiFID?
Banking laws. The Capital Requirements Directives^183 prohibit “persons or un-
dertakings that are not credit institutions from carrying on the business of taking
deposits or other repayable funds from the public”.^184 While the scope of “taking
deposits or other repayable funds” is “as broad as possible” and covers not only
deposits but may take even other forms such as the continuing issue of bonds and
other comparable securities,^185 those activities are not prohibited if they are not di-
rected to “the public”. For example, certain commercial paper will not be treated
as deposits under English law if they fall within the exclusions of the RA Order.^186
Prospectus, transparency. Typically, neither the Prospectus Directive nor the
Transparency Directive apply to money market instruments. The securities to
which the Prospectus Directive applies do not include money market instruments
having a maturity of less than 12 months. For these instruments, national legisla-
tion may be applicable.^187 The Transparency Directive only applies where securi-
ties have been admitted to trading on a regulated market,^188 and money market in-
struments (which typically are not listed) will not fall within its scope.^189
MiFID. Unlike prospectus and transparency requirements, the MiFID can apply
in the context of money market transactions.
The MiFID applies to investment firms and regulated markets.^190 For the pur-
poses of the MiFID, investment firm means “any legal person whose regular oc-
cupation or business is the provision of one or more investment services to third
parties and/or the performance of one or more investment activities on a profes-
sional basis”.^191 Investment services can relate to short-term securities. For exam-
ple, money market instruments are financial instruments covered by the MiFID^192
(^182) Ibid, p 15.
(^183) Directive 2006/48/EC and Directive 2006/49/EC.
(^184) Article 5 of Directive 2006/48/EC (Capital Requirements Directive).
(^185) Recital 6 of Directive 2006/48/EC (Capital Requirements Directive).
(^186) Article 9 of the Financial Services and Markets Act 2000 (Regulated Activities) Order
2001 (as amended). See Fuller G, Corporate Borrowing. Third Edition. Jordans, Bristol
(2006) paragraph 10.12.
(^187) Article 2(1)(a) of Directive 2003/71/EC (Prospectus Directive).
(^188) Article 1(1) of Directive 2004/109/EC (Transparency Directive).
(^189) Article 2(1)(a) of Directive 2004/109/EC (Transparency Directive).
(^190) Article 1(1) of Directive 2004/39/EC (MiFID).
(^191) Article 4(1)(1) of Directive 2004/39/EC (MiFID).
(^192) Annex I, Section C(2) of Directive 2004/39/EC (MiFID).