A Directive produced by the European Commission regarding the provision of investment services within the member states of the European Union. The Directive has been described as the 'passport to Europe' for securities houses. The key feature of the Directive is that of 'mutual recognition', in that: a) any firm approved to provide investment services within its home state is mutually recognised by all other member states as being allowed to provide the same services within those other member states; and b) any stock market or exchange that is recognised by its Competent Authorities within one member state is mutually recognised in all other member states as being allowed to offer its services (including the installation of trading system computer terminals) within those other member states. A new ISD is currently being negotiated with a focus on establishing a single marketplace for securities covering all member states of the European Union. See 'Competent Authority'.