European Investment Services and Regulated Markets (MiFID)
MiFID is the European Markets in Financial Instruments Directive (Directive 2004/39/EC) and it is active since November 2007, this directive governs the provision of investment services in financial instruments by banks and investment firms and 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 to 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 more robust regulatory framework was needed to
- further strengthen investor protection
- address the development of new trading platforms and activities
Markets in financial instruments directive - MiFID
MiFID is the markets in financial instruments directive (Directive 2004/39/EC). In force since November 2007, it is a cornerstone of the EU's regulation of financial markets. It governs
- the provision of investment services in financial instruments by banks and investment firms
- operation of traditional stock exchanges and alternative trading venues
While MiFID created competition between these services and brought more choice and lower prices for investors, shortcomings were exposed in the wake of the financial crisis.
MiFID 2 and MiFIR
In October 2011, the European Commission tabled proposals to revise the Markets in Financial Instruments Directive (MiFID 2) with the aim of making financial markets more efficient, resilient and transparent, and to strengthen the protection of investors.
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 has been extended to 3 January 2018.
■ MiFID and MiFID2 for the Financial/Forex Industry
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