MiFID II Regulations

A final revised Markets in Financial Instruments Directive and Regulation (MiFID II) was published in the EU Official Journal on the 12th June 2014. MiFID II represents two major changes compared to MiFID I:

  • An overhaul of the existing MiFID I rules regarding Equities
  • An extension of the scope to include non-Equities, such as bonds and derivatives

Overview

The requirements in MiFID II are divided into a regulation (MiFIR) and directive (MiFID). The main requirements included in each of the two are outlined below.

Directive:

  • Investor protection (e.g. a definition of independent and dependent advice, a ban on inducements and product governance)
  • Provision of market data and data consolidation (including a single consolidated tape for Equities in the EU)
  • Authorisation and operating conditions for investments firms
  • Rules for Algorithmic and High-Frequency trading
  • Rules for commodity derivatives
  • Introduction of a new trading venue, Organised Trading Facility (OTF)

Regulation:

  • Transparency requirements for trading venues, Systematic Internaliser and trading OTC (Pre-trade transparency and Post-trade transparency), requiring public disclosure of trades executed and transaction reporting to authorities
  • An obligation for derivatives to be traded on trading venues (MTF, OTF, Regulated Market)
  • Open access to trading venues and CCPs, and CCP interoperability
  • Product intervention powers for supervisory authorities
  • Rules for the treatment of entities from 3rdcountries operating in the EU

 

MiFID II Supervisors

MiFID II supervisors

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