In this section we explain some of the background to how the new MiFID II requirements have evolved. This will help to understand why some requirements will apply to firms either as rules or guidance or not at all.
As a reminder, the UK is obliged to enforce EU regulations for as long as we remain a member of the EU. The FCA has confirmed it will keep all proposals and policy under review to take account of changes needed around the UK’s exit from the EU.
What is MiFID II?
The Markets in Financial Instruments Directive (MiFID) is the framework legislation for the provision of investment services and the operation of financial markets within the European Union (EU).
The first MiFID directive has applied since November 2007 and many aspects of UK regulation are already driven by MiFID requirements. The original MiFID directive ha now being replaced by new legislation known collectively as ‘MiFID II’ which came into force on the 3 January 2018. The changes in MiFID II are broadly designed to make financial markets more transparent, efficient and resilient, to take account of more recent technological developments, to strengthen investor protection and increase supervisory powers.
MiFID II 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.