MiFID II
MiFID IIAlso called markets in Financial Instruments Directive II, directive 2014/65/EU
MiFID II is the EU's main rulebook for investment services and trading. It is Directive 2014/65/EU, applied with the MiFIR regulation since 3 January 2018. It covers how investment firms are authorised, how they treat clients, how trading venues operate and what trade and transaction data firms must report and publish.
How it works
Investment firms must assess suitability and appropriateness for clients, disclose costs and charges, and follow product governance rules. They record telephone and electronic communications linked to client orders. Under MiFIR they send transaction reports to their national regulator, usually by the next working day, and publish trades through approved publication arrangements. Trading venues meet transparency and market structure rules.
MiFID II produces one of the largest regulatory data flows in Europe. Transaction reports feed market abuse surveillance by supervisors, and reporting errors are a frequent enforcement topic. The 2024 MiFIR review, Regulation (EU) 2024/791, introduces consolidated tapes and changes transparency rules. The UK retained MiFID rules after Brexit and is reforming them separately.
The rules
Sets authorisation, conduct of business, investor protection and market structure rules for investment services.
EU investment firms, credit institutions providing investment services and trading venuesSets pre- and post-trade transparency, transaction reporting and trading obligations directly across the EU.
Investment firms, trading venues and data reporting service providersIntroduces EU consolidated tapes, bans payment for order flow and recalibrates transparency rules.
Trading venues, investment firms and consolidated tape providersCommon questions
What is the difference between MiFID II and MiFIR?
MiFID II is a directive that each member state writes into national law. MiFIR is a regulation that applies directly. MiFIR holds the transaction reporting, transparency and trading obligations, while MiFID II covers authorisation and conduct.
Does MiFID II still apply in the UK?
The UK onshored MiFID II and MiFIR at Brexit, and the FCA applies them through its Handbook. The UK is changing these rules under its own reform programme, so UK and EU requirements now differ in places.
What is MiFID II transaction reporting?
Investment firms report details of each reportable transaction to their national regulator by the end of the following working day. Reports include instrument, price, quantity, buyer, seller and decision maker identifiers, and are used for market abuse surveillance.
What did the 2024 MiFIR review change?
Regulation (EU) 2024/791 entered into force on 28 March 2024. It creates consolidated tapes for equities and bonds, bans payment for order flow with transition periods, and changes pre- and post-trade transparency rules.
