The Markets in Financial Instruments Directive is the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded.
The Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for:
- investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as ‘financial instruments’)
- the organised trading of financial instruments
MiFID applied in the UK from November 2007, and was revised by MiFID II, which took effect in January 2018, to improve the functioning of financial markets in light of the financial crisis and to strengthen investor protection. MiFID II extended the MiFID requirements in a number of areas including:
- new market structure requirements
- new and extended requirements in relation to transparency
- new rules on research and inducements
- new product governance requirements for manufacturers and distributers of MiFID ‘products’
- introduction of a harmonised commodity position limits regime
Level 1
MiFID II is made up of MiFID (2014/65/EU) and the Markets in Financial Instruments Regulation (MiFIR - 600/2014/EU).
- Directive 2014/65/EU on MiFID II, repealing Directive 2004/39/EC
- Regulation (EU) No 600/2014 on markets in financial instruments (MiFIR)
As an EU regulation, MiFIR is binding in its entirety and directly applicable, its content becomes law in the UK without the need for domestic legislative intervention.
Level 2
MiFID II enables the European Commission to make secondary legislation in several places. That legislation takes the form of a combination of delegated acts, regulatory technical standards (RTS) and implementing technical standards (ITS). These can be accessed on the European Commission’s website.
Key publications
- PS17/5: Markets in Financial Instruments Directive II implementation – Policy Statement I
- PS17/14: Markets in Financial Instruments Directive II Implementation – Policy Statement II
- MiFID 2 Guide Instrument 2017 (FCA 2017/63)
- Technical standards under MiFID II and MiFIR
The Treasury legislation implementing MiFID II is set out in the following statutory instruments (links to statutory instruments relate to the instrument when made and users may need to update their searches of the relevant legislation):
- Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (‘MiFI regulations’), SI 2017/701
- The Data Reporting Services Regulations 2017 (‘DRS regulations’), SI 2017/699
- Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017 (‘RAO Amendment Order’), SI 2017/488
This summer we will be publishing our Discussion Paper for the Investment Firms Prudential Regime (IFPR) as part of our engagement on the new regime.