The updated Markets in Financial Instruments Directive (MiFID II) and accompanying regulation (MiFIR) create a huge and complex rulebook that will transform the way financial markets operate and how trading activity is conducted in the European Union. While designed more for the sell side than buy side, its scope means any investment manager that has dealings with European clients, funds or even assets will be impacted to some extent, and will need to adopt a MiFID II program.
The original MiFID, introduced in 2007, sought to promote competition between and access to trading venues, increase equity market transparency and enhance investor protection. While generally successful, evolutions in the trading environment have led to gaps or inconsistencies in parts of the regulatory framework, according to specialist investment management consulting rm Citisoft1. MiFID II, when it takes effect on 3 January 2018, aims to further strengthen the single market and plug those gaps by widening the scope of investment services requiring authorization by member states and the range of investments covered.