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MiFID MiFIR

The Directive 2014/65/EU (hereafter the “Directive”) on markets in financial instruments, the so-called MiFID II, entered into force in July 2014 but only recently, in 3rd of January 2018, the rules started to apply.

The Directive comes together with the Regulation 600/2014 (hereafter the “Regulation”), the so-called MiFIR and a Commission Delegated Directive and a Delegated Regulation, both dated in April 2016. ESMA has also published its Guidelines regarding the new legal framework. MiFID II is the revised version of MiFID (Directive 2004/39) and the result of the financial crisis of 2008 that underlined the need for more transparency and clearer rules in the financial market.

It would be unreasonable to try to explain the whole MiFID II, as the complete MiFID II documentation is more than a thousand pages; hence we will tell the essentials that you need to know.

What is the scope of the MiFID 2 Directive


MiFID II applies to financial services businesses and more specifically to “investment firms, market operators, data reporting services providers, and third-country firms providing investment services or performing investment activities through the establishment of a branch in the Union”.

What are the objectives of the MiFID 2 Directive


The MiFID II “package”, with its Directive, Regulation, Guidelines etc., regulates many different aspects of the financial market, among them:
  • More transparency in the market.
  • More protection for the investors that will reinforce their confidence in the market.
  • The Directive underlines the necessity of the establishment of a clear regulatory regime governing the execution of transactions in financial instruments irrespective of the trading methods used to conclude those transactions, meaning better quality of execution and efficiency of the system.
  • Enhancement of the “best execution” framework for the retail investors.
  • More transparency and stronger legal framework for markets in financial instruments, including where trading in such markets takes place over-the-counter (“OTC”).
Finally, all the measures aim at enhanced harmonization of the rules among member states and financial stability in the EU.

What do you need to do in order to be compliant with MiFID II?


You may find yourself in difficulty trying to understand MiFID II and its implications. Non-compliance with MiFID II can lead to significant administrative and financial sanctions for your business.

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