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The recast Markets in Financial Instruments Directive (2014/65/EU) (MiFID2) and Markets in Financial Instruments Regulation (MiFIR) set out a harmonised EU framework for the regulation of investment services and activities. MiFID2 and MiFIR set out a licensing and passporting regime for EEA investment firms and conduct of business requirements applicable to firms (including investment firms, credit institutions and fund managers) providing investment services and activities in the EEA. They also regulate trading venues and data reporting service providers.
Although the original Markets in Financial Instruments Directive 2004/39/EC (MiFID1) was widely regarded to have successfully achieved its main objectives (by increasing investor protection and competition), the vulnerability of financial markets after the financial crisis and the significant market developments since the implementation of MiFID1 in 2007 prompted further reforms introduced under MiFID2 and MiFIR.
The key changes introduced by MiFID2 and MiFIR include:
| Status: | MiFID2 and MiFIR were published in the Official Journal of the European Union on 12 June 2014. Originally scheduled to apply from 3 January 2017, their implementation was delayed by one year to 3 January 2018. The two delegated Regulations and one delegated Directive required under MiFID2/MiFIR were published in the Official Journal on 31 March 2017 and entered into force on 20 April 2017. MiFID2 was required to be transposed into national law by 3 July 2017. Member States required to apply the measures from 3 January 2018 except for provisions transposing Article 65(2) on consolidated tape providers which will apply from 3 September 2019. MiFIR and most provisions of the Delegated Regulations, regulatory technical standards (RTS) and implementing technical standards (ITS) apply from 3 January 2018. The status of the RTS and ITS is indicated in the Technical Standards table in the Legislation: Level 1 and Level 2 section below. |
| Next: | The Investment Firms Directive (Directive (EU) 2019/2034) and Investment Firms Regulation (Regulation (EU) 2019/2033) will introduce changes to the third country access provisions under MiFID2 and MiFIR, from June 2021. On 24 July 2020, the Commission published MiFID2 quick fix proposals (amending both level 1 and level 2 texts) as part its Capital Markets Recovery Package in response to the COVID-19 pandemic. The proposals cover investor protection, commodity derivatives and research. |
| Maria Luisa Alonso (Madrid) | Simon Crown (London) |
| Chris Bates (London) | Caroline Dawson (London) |
| Marc Benzler (Frankfurt) | Simon Gleeson (London) |
| Anna Biala (Warsaw) | Frédérick Lacroix (Paris) |
| Lucio Bonavitacola (Milan) | Caroline Meinertz (London) |
| Peter Chapman (London) | Monica Sah (London) |
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| Legislative provision |
Topic |
Consultations and reports |
| Article 52(7), MiFIR |
Prices for pre and post trade data |
(5 December 2019) Review report on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments | Press release (12 July 2019) Consultation paper | Consultation webpage (includes responses) |
| Article 90(2), MiFID2 |
Consolidated Tape - Equity |
See above |
| Articles 40 and 42, MiFIR | Product intervention measures | (3 February 2020) Final Report: ESMA's technical advice to the Commission on the effects of product intervention measures (ESMA35-43-2134) | Press release (30 September 2019) Call for evidence (ESMA35-43-2090) | Press release |
| Article 90(4), MiFID2 |
C6 Energy derivatives contracts |
(29 January 2020) Report: MiFID2 - C6 energy derivative contracts and the EMIR requirements (ESMA70-151-2908) | Press release |
| Article 90(1)(f), MiFID2 |
Position Limits |
(1 April 2020) MiFID2 Review report on position limits and position management | Press release (13 January 2020) Responses published | Press release (5 November 2019) Consultation paper on MiFID2 review report on position limits and position management, and Draft Technical Advice on weekly position reports (ESMA70-156-1484) | Press release |
| Article 90(1)(h), MiFID2 |
Cross-border Investment advice |
(31 March 2020) Final Report: ESMA's technical advice to the Commission on the impact of the inducements and costs and charges disclosure requirements | Press release |
| Article 90(1)(d), MiFID2 |
Banning of products and practices |
ESMA deadline: March 2020 |
| Article 19(1), MiFIR |
Systematic internaliser (quotes in non-equity) |
(16 July 2020) MiFIR report on systematic internalisers in non-equity instruments (ESMA70-156-2756) | Press release (3 February 2020) Consultation paper on MiFIR report on systematic internalisers in non-equity instruments (ESMA70-156-1757) | Press release |
| Article 52(1), MiFIR |
Transparency in particular DVC and waivers |
(23 July 2020) MiFID2/MiFIR Annual Review Report under RTS 2 - proposes amendments to thresholds for the liquidity criterion 'average daily number of trades' for bonds and trade percentiles | Press release (16 July 2020) MiFID2/MiFIR review report on the transparency regime for equity and equity-like instruments, the double volume trading cap mechanism and the trading obligations for shares (ESMA70-156-2682) | Press release (10 March 2020) Consultation on MiFID2/MiFIR review report on the transparency regime for non-equity instruments and the trading obligation for derivatives (ESMA70-156-2189) | Press release (4 February 2020) Consultation on MiFID2/MiFIR review report on the transparency regime for equity and equity-like instruments, the DVC and the trading obligations for shares (ESMA70-156-2188) | Press release |
| Article 52(6), MiFIR |
Trading Obligation Derivatives |
See directly above |
| Article 26(10), MiFIR |
Transaction reporting |
ESMA deadline: Q1 2021 |
| Article 90(1)(a), MiFID2 |
OTF | ESMA deadline: Q1 2021 |
| Article 90(1)(b), MiFID2 |
SME Growth Markets |
ESMA deadline: December 2020 (6 May 2020) Consultation on the functioning of the regime for SME Growth Markets under MiFID and on the amendments to MAR for the promotion of the use of SME Growth Markets | Press release |
| Article 90(1)(c), MiFID2 |
Algo trading |
ESMA deadline: Q1 2021 |
| Article 90(1)(e), MiFID2 |
Sanctions |
ESMA deadline: March 2021 |
| Article 52(5), MiFIR |
Consolidated Quote - EBBO | ESMA deadline: March 2021 |
| Article 90(2), MiFID2 |
Consolidated Tape - Non-Equity |
ESMA deadline: March 2021 |
| Article 52(8), MiFIR |
Interoperability |
ESMA deadline: January 2022 |
| Article 52(9), MiFIR |
Access |
ESMA deadline: January 2022 |
| Article 52(10), MiFIR |
Exemption from access |
ESMA deadline: January 2022 |
| Article 52(11), MiFIR |
Exemption from access |
ESMA deadline: January 2022 |
| Article 52(9), MiFIR |
Benchmark |
ESMA deadline: January 2022 |
See the FSA MiFID1 Library, for links to FSA and other documents relating to the implementation of MiFID1 in the UK
The UK left the EU at 11.00 p.m. on 31 January 2020 on the terms of the Withdrawal Agreement agreed between the UK and the EU. The Withdrawal Agreement provides that the UK's departure from the EU is followed by a transition period during which the UK will remain subject to EU law (including new laws coming into force during the transition period) and participate in the EU's single market and customs union. This transition period is due to end at 11.00 p.m. on 31 December 2020.
The European Union (Withdrawal) Act 2018 (EUWA), as amended by the European Union (Withdrawal Agreement) Act 2020 (WAA), provides for domestication of most EU law at the end of the transition period. The EUWA also grants powers to the UK government to correct deficiencies in this "retained EU law" arising from the UK's withdrawal from the EU, including in connection with the end of the transition period or other effects of the Withdrawal Agreement. This is to ensure that the UK has a functioning statute book at the end of the transition period.
The UK government has published various statutory instruments in exercise of these powers, which were originally granted in the context of the UK's contingency planning for a 'no deal' Brexit. These include:
the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 (SI 2018/1403), which amends MiFIR, the tertiary legislation made under MiFID2 and the UK legislation which implemented MiFID;
the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 (SI 2018/1149), which puts in place a 'temporary permissions regime (TPR)' to mitigate the impact of the loss of 'passport' rights for EEA firms, including passport rights under MiFID2;
the Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019 (SI 2019/405), which puts in place a 'financial services contracts regime (FSCR)' to mitigate the impact of the loss of 'passport' rights for EEA firms that do not or no longer benefit from the TPR;
the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/541), which facilitated the making of equivalence determinations and exemptions under EU legislation, including MiFID2/MiFIR.
Under the WAA these now come into force at the end of the transition period (on 'IP completion day' instead of on 'exit day'). The UK government is expected to publish further statutory instruments during the course of 2020.
The FCA is expected to use powers delegated to it under the EUWA to remedy deficiencies in the technical standards under MiFID2/MiFIR and its own rules that will result from the end of the transition period. The FCA published near-final instruments under these powers to address a 'no-deal' Brexit in 2019. See PS19/5: Brexit Policy Statement. It is also expected to use the temporary transitional power (TTP) delegated to it under the EUWA to mitigate other impacts of the end of the transition period, including in relation to MiFID2/MiFIR. See Updates to the FCA’s directions under the Temporary Transitional Power (December 2019) for information on the proposals made before the UK left the EU.
On 23 June 2020, the FCA published a discussion paper on a new UK prudential regime for MiFID investment firms.
For more information on the FCA's actions with respect to Brexit, see here.
For more information on Brexit and the transition period, please see the Brexit Topic Guide.
Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 | Explanatory memorandum
Financial Services and Markets Act 2000 (Markets in Financial Instruments) (No 2) Regulations 2017 | Explanatory memorandum
Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017 | Explanatory memorandum
Data Reporting Services Regulations 2017 | Explanatory memorandum
Financial Services and Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018 | Explanatory memorandum
(February 2017) Transposition note
(9 February 2017) Document on the outcome of the consultation on the transposition of MiFID2 and draft SIs published on the consultation webpage
(20 September 2016) Consultation on amending definition of regulated advice in Article 53 RAO to reflect the definition under MiFID
(27 March 2015) Consultation on the transposition of MiFID2 | Webpage
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