🏛️ European Investment Services and Regulated Markets (MiFID)
MiFID, the European Markets in Financial Instruments Directive (Directive 2004/39/EC), has been in effect since November 2007. It regulates the provision of investment services in financial instruments by banks and investment firms, as well as the operation of traditional stock exchanges and alternative trading venues.
EU Rules for the Financial Sector
The first set of rules adopted by the EU helped increase the competitiveness of financial markets by creating a single market for investment services and activities. However, after the 2008 financial crisis, it became clear that a stronger regulatory framework was needed to further enhance investor protection and address the emergence of new trading platforms and activities.
Markets in financial instruments directive - MiFID
MiFID, the Markets in Financial Instruments Directive (Directive 2004/39/EC), has been in force since November 2007 and serves as a cornerstone of the EU's financial market regulation. It governs the provision of investment services in financial instruments by banks and investment firms, as well as the operation of traditional stock exchanges and alternative trading venues. While MiFID fostered competition among these services, offering investors more choice and lower prices, its shortcomings became apparent after the financial crisis.
MiFID 2 and MiFIR
In October 2011, the European Commission proposed revisions to MiFID (known as MiFID 2) aimed at making financial markets more efficient, resilient, and transparent, while also strengthening investor protection.
MiFID 2 Purposes
- organized trading takes place on regulated platforms
- rules on algorithmic and high-frequency trading
- improving the transparency and oversight of financial markets (including derivatives markets)
- conditions for competition in the trading and clearing of financial instruments
MiFIR Requirements
- disclosure of data on trading activity to the public
- disclosure of transaction data to regulators and supervisors
- mandatory trading of derivatives on organized venues
- removal of barriers between trading venues and providers of clearing services
- supervisory actions regarding financial instruments and positions in derivatives
The application date of MiFID II and MiFIR was extended to January 3, 2018.
■ MiFID and MiFID2 for the Financial/Forex Industry
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