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MIFID II and what it means.

Financial Conduct

On 3rd January 2018, the revised MIFID II (a combination of the Markets in Financial Instruments Directive and the Markets in Financial Instruments Regulation) will come into force. Launched in response to the financial crisis, MIFID II is one of the measures designed to make the European financial markets stronger and more investor-friendly. Other measures include the EMIR (European Markets Infrastructure Regulation) and SFTR (Securities Transactions Regulation).

 

In October 2011 a revision of MIFID II was proposed, and on 14th January 2014 agreement of changes was reached. However, a one year extension was applied on 10th February 2016, taking the enactment date from 2017 to 2018. This was in response to the huge technical undertaking that regulators and market participants faced.

 

What does MIFID II do?

Under the revised regulations, all financial instruments must be moved onto regulated trading platforms and adhere to strict transparency rules and requirements. “Shadow banking” will be stringently monitored and “dark trading” will be banned.

 

Who is affected?

The Regulations apply to you if:

 

  • You work in the financial sector, or deal with financial instruments anywhere in the European Economic Area (EEA), regardless of if you are based within the EEA or outside it.
  • You work in the financial sector, or deal with financial instruments outside of the EEA but are based inside the EEA.

 

It affects data, people, business and operating systems.

 

But what about Brexit?

As the UK is still a member of the G20, it still has to abide by the MIFID II regulations. Interestingly, many of the changes made to MIFID II were at the behest of the UK.