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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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MiFID2 Mandates | MiFIR Mandates
| MiFID2 Mandates |
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| Article | Topic |
Consultations |
Reports |
| Article 90(1)(a) |
Functioning of OTFs |
(25 September 2020) Consultation paper on the functioning of organised trading facilities - closes 25 November 2020 | Press release |
Report expected: March 2021 |
| Article 90(1)(b) |
Regime for SME growth markets NB. Changes proposed as part of 'quick fix' |
(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 |
Report expected: December 2020 |
| Article 90(1)(c) |
Impact of algorithmic trading requirements |
(18 December 2020) Consultation on algorithmic trading | Press release |
Report expected: July 2021 |
| Article 90(1)(d) |
Experience with the mechanism for banning certain products or practices NB. ESMA ceased renewal of product intervention powers in July 2019 |
(30 September 2019) Call for evidence on the effects of product intervention measures regarding CFDs and binary options | Press release |
No formal report issued |
| Article 90(1)(e) |
Application of sanctions |
Forthcoming |
Report expected: March 2021 |
| Article 90(1)(f) |
Commodity derivatives position limits / management NB. Priority area identified in 2020 Commission consultation; changes proposed as part of 'quick fix' |
(5 November 2019) Consultation paper on MiFID2 review report on position limits and position management, and Draft Technical Advice on weekly position reports | Press release |
(1 April 2020) MiFID2 Review report on position limits and position management | Press release |
| Article 90(1)(g) |
Development of prices for pre- and post-trade transparency data |
(12 July 2019) Consultation paper on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments | Consultation webpage |
(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 |
| Article 90(1)(h) |
Impact of inducements and costs and charges disclosure requirements NB. Priority area identified in 2020 Commission consultation; changes proposed as part of 'quick fix' |
(17 July 2019) Call for evidence on impact of inducements and costs and charges disclosure requirements | Webpage |
(31 March 2020) Technical advice to the EU Commission on the impact of the inducements and costs and charges disclosure requirements | Press release |
| Article 90(2) |
Consolidated Tape NB. Priority area identified in 2020 Commission consultation |
(12 July 2019) Consultation paper on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments | Consultation webpage - covered in the same consultation as for Article 90(1)(g) mandate with respect to equity instruments |
(9 October 2020) Study on the Creation of an EU Consolidated Tape - prepared by Market Structure Partners for the EU Commission (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 ESMA expected to consult and report with respect of non-equity instruments by March 2021 |
| Article 90(4) |
C6 energy derivatives contracts and the clearing obligation |
No public consultation |
(26 January 2020) Report on C6 energy derivatives contracts and the EMIR requirements | Press release |
| MiFIR Mandates |
|||
| Article |
Topic |
Consultations |
Reports |
| Article 19(1) |
Systematic internalisers in non-equity instruments |
(3 February 2020) Consultation paper on MiFIR report on systematic internalisers in non-equity instruments | Press release |
(16 July 2020) MiFIR report on systematic internalisers in non-equity instruments |
| Article 52(1)-(3) |
Impact of the transparency obligations including volume cap mechanism |
(10 March 2020) Consultation on the transparency regime for non-equity instruments and the trading obligation for derivatives | Press release (4 February 2020) Consultation on the transparency regime for equity and equity-like instruments, the DVC and the trading obligations for shares | Press release |
(25 September 2020) Review Report on the transparency regime for non-equity instruments and the trading obligation for derivatives | Press release (16 July 2020) Review Report on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares |
| Article 52(4) |
Functioning of Article 26 transaction reporting requirements |
(24 September 2020) Consultation paper on the obligations to report transactions and reference data | Press release |
Report expected: Q1 2021 |
| Article 52(5) |
Reducing information asymmetries between market participants |
Forthcoming |
Report expected: March 2021 (as for consolidated tape) |
| Article 52(6) | Progress on the DTO | (10 March 2020) Consultation on the transparency regime for non-equity instruments and the trading obligation for derivatives | Press release - covered in the same consultation as for Article 52(1)-(3) mandate with respect to non-equity instruments | (25 September 2020) Review Report on the transparency regime for non-equity instruments and the trading obligation for derivatives | Press release - covered in the same report as for Article 52(1)-(3) mandate with respect to non-equity instruments |
| Article 52(7) |
Development in prices for pre-trade and post-trade transparency data from venues and DRSPs |
(12 July 2019) Consultation paper on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments | Consultation webpage - covered in the same consultation as for Article 90(1)(g) MiFID2 mandate with respect to equity instruments |
(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 - covered in the same report as for Article 90(1)(g) MiFID2 mandate with respect to equity instruments |
| Article 52(8) |
Interoperability provisions in Article 36 MiFIR and Article 8 EMIR |
|
Report expected: January 2022 |
| Article 52(9) |
FMI access requirements in Articles 35-37 MiFIR and Articles 7 and 8 of EMIR |
Report expected:January 2022 | |
| Article 52(10) |
Exemption from Article 35 and 36 open access requirements for newly established CCPs |
|
Report expected: January 2022 |
| Article 52(11) |
Whether the threshold at Article 36(5) MiFIR remains appropriate |
Report expected: January 2022 | |
| RTS 1 and 2 |
Implementing measures for the transparency regime |
(1 September 2020) Call for evidence on RTS 1 and 2 review - closes 31 October 2020 Formal consultation expected Q1 2021 |
|
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 FCA is using 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. 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.
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
(15 December 2020) Call for evidence on overseas framework, including investment services equivalence under Title VIII of UK MiFIR
(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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Insights on MiFID Review
Insights on MiFID2
Insights for asset managers
Insights for derivatives
