MiFID2 and MiFIR

Topic Guides

MiFID2 and MiFIR herald important changes to the regulation of financial markets in Europe. This Topic Guide helps you navigate both the legislation itself and the complex array of secondary rules through which it is being implemented and allows you easy access to briefing notes and other materials prepared by Clifford Chance's team of financial regulation experts.

Inside this Topic Guide

Topic overview and current status

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:

an overhaul of market structure, including the introduction of a new multilateral, discretionary trading venue for non-equities, the Organised Trading Facility (OTF);
increased transparency and transaction reporting requirements;
equities and derivatives trading obligations;
heightened conduct of business requirements and supervisory enforcement powers;
much greater regulation of commodities business including position limits and reporting; and
new rules for "third country" (i.e. non-EU) firms accessing EU markets.

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 co-legislators have agreed proposed amendments to MiFID2 and MiFIR in relation to the regulation of data reporting services providers (under the so-called Omnibus 3 package) and in relation to the third country regimes (under the Investment Firms Directive and Regulation). These amendments are expected to be published in the Official Journal later in 2019.

The transitional opt-out from MiFIR open access requirements in relation to ETDs will end on 3 July 2020.

The Commission is due to report on its review of the functioning of various aspects of MiFID2 and MiFIR by 3 March 2020.

Clifford Chance contacts

Maria Luisa Alonso (Madrid)	Caroline Dawson (London)
Chris Bates (London)	Simon Gleeson (London)
Marc Benzler (Frankfurt)	Frédérick Lacroix (Paris)
Anna Biala (Warsaw)	Owen Lysak (London)
Lucio Bonavitacola (Milan)	Caroline Meinertz (London)
Peter Chapman (London)	Monica Sah (London)
Simon Crown (London)

Legislation, regulation and official documentation

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MiFID2 Review

(19 November 2019) Speech by Steven Maijoor, Chair of ESMA, on banking and the MiFID2 Review, delivered at the Euro Finance Week in Frankfurt
(27 March 2019) ESMA letter to the European Commission on MiFID2/MiFIR Review Reports - sets out timing of reports required under MiFID2 | Press release

German Ministry of Finance consultation

(27 August 2019) BMF position papers on MiFID2, the PRIIPs Regulation and MiFIR forwarded to the European Commission:
- Necessary amendments and revisions to investor protection provisions in MiFID and PRIIPs (in English)
- Necessary amendments and revisions to secondary market provisions in MiFID and MiFIR (in English)
- Press release (in German)
(8 January 2019) German Federal Ministry of Finance (BMF) consultation on MiFID2/MiFIR (in German) - closed 15 March 2019

Review materials

Legislative provision	Topic	Consultations and reports
Article 52(7), MiFIR	Prices for pre and post trade data	(5 December 2019) Review Report No. 1 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 - closed 6 September 2019 \| Consultation webpage (includes responses)
Article 90(2), MiFID2	Consolidated Tape - Equity	ESMA deadline: December 2019
Article 90(4), MiFID2	C6 Energy derivatives contracts	ESMA deadline: January 2020
Article 90(1)(f), MiFID2	Position Limits	ESMA deadline: March 2020 (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) - closes 8 January 2020 \| Press release
Article 90(1)(h), MiFID2	Cross-border Investment advice	ESMA deadline: March 2020
Article 90(1)(d), MiFID2	Banning of products and practices	ESMA deadline: March 2020
Article 19(1), MiFIR	Systematic internaliser (quotes in non-equity)	ESMA deadline: July 2020
Article 52(1), MiFIR	Transparency in particular DVC and waivers	ESMA deadline: July 2020
Article 52(6), MiFIR	Trading Obligation Derivatives	ESMA deadline: July 2020
Article 26(10), MiFIR	Transaction reporting	ESMA deadline: July 2020
Article 90(1)(a), MiFID2	OTF	ESMA deadline: December 2020
Article 90(1)(b), MiFID2	SME Growth Markets	ESMA deadline: December 2020
Article 90(1)(c), MiFID2	Algo trading	ESMA deadline: December 2020
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

MiFID1

Clifford Chance MiFID1 material

MiFID Connect online tool for UK implementation of MiFID1 including guidelines on outsourcing, suitability and appropriateness, investment research, best execution, and conflicts of interest.
MiFID1 application of key provisions by client category.

MiFID Review materials (2010)

Additional information

(October 2010) CESR Response to questions 1 to 14 and 19 of Commission request for additional information
(July 2010) CESR Responses to questions 15 to 18 and 20 to 25 of Commission request for additional information
(March 2010) CESR Response letter to Commission request for additional information in relation to the MiFID Review
(March 2010) Commission letter to CESR – request for additional information in relation to the MiFID Review

Client categorisation

(October 2010) CESR Feedback statement on technical advice – client categorisation
(October 2010) CESR Technical advice – client categorisation
(July 2010) CESR Consultation paper on client categorisation

Standardisation and organised platform trading of OTC derivatives

(December 2010) CESR Feedback statement on CESR technical advice – standardisation and organised platform trading of OTC derivatives
(October 2010) CESR Technical advice – standardisation and organised platform trading of OTC derivatives

Equity markets

(October 2010) CESR Technical advice – equity markets
(October 2010) CESR Technical advice – post trade transparency equities
(July 2010) CESR Technical advice – equity markets
(April 2010) CESR Consultation paper on equity markets
(April 2010) CESR Call for evidence – micro-structural issues of the European equity markets

Non-equity markets transparency

(October 2010) CESR feedback statement on technical advice – non-equity markets transparency
(July 2010) CESR Technical advice – non equity markets transparency
(June 2010) CESR Responses to consultation on non equity markets transparency
(May 2010) CESR Consultation paper on non equity markets transparency
(July 2009) CESR Report on transparency of corporate bond, structured finance product and credit derivatives markets

Transaction reporting

(December 2010) CESR Feedback statement on extension of transaction reporting
(July 2010) CESR Consultation paper on OTC derivatives and extension of scope of transaction reporting
(July 2010) CESR Technical advice – transaction reporting
(April 2010) CESR Consultation paper on transaction reporting

Investor protection and intermediaries

(November 2010) CESR Report summary of responses to 2009 best execution questionnaire (Sections 1 to 4)
(September 2010) CESR Feedback statement on CESR technical advice – investor protection and intermediaries
(July 2010) CESR Technical advice – investor protection and intermediaries
(April 2010) CESR Consultation paper on investor protection and intermediaries

Level 1: legislative acts

Markets in Financial Instruments (MIFID1) Directive 2004/39/EC (Consolidated version)

Level 2: implementation

Commission Directive 2006/73/EC implementing Directive 2004/39/EC
Commission Regulation 1287/2006/EC implementing Directive 2004/39/EC
Commission FAQs on Level 2

European Commission

European Securities Markets Authority (ESMA)

(18 May 2017) Follow-up report to the peer review on MiFID Conduct of Business rules relating to fair, clear and not misleading information
(25 July 2016) ESMA Q&A on provision of CFDs and other speculative products to retail investors under MiFID
(April 2016) MiFID Suitability Requirements Peer Review Report | Annex
(July 2015) Consultation on draft Joint European Supervisory Authorities' guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (to replace December 2008 financial committee's Guidelines)
(May 2015) Guidelines on the application of the definitions in Sections C6 and C7 of Annex I of Directive 2004/39/EC (MiFID)
(March 2015) Final draft technical standards on information requirements for assessments of acquisitions and increases in holdings in investment firms (not yet adopted) - amends final draft report published December 2013
(March 2015) Guidelines on automated trading - ESMA peer review among National Competent Authorities.
(September 2014) Consultation on draft guidelines on the application of C6 and C7 of Annex I of MiFID.
(June 2013) Guidelines on remuneration policies and practices.
(July 2012) Guidelines on certain aspects of the MiFID suitability requirements.
(July 2012) Guidelines on certain aspects of the MiFID compliance function requirements.
(24 February 2012) Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities.

Committee of European Securities Regulators (CESR)

(May 2010) MiFID Q&A: (1) Common positions agreed by CESR Members of the Investor Protection and Intermediaries Standing Committee; and (2) Common positions agreed by CESR Members in the area of the Secondary Markets Standing Committee
(19 April 2010) Q&A - Understanding the definition of advice under MiFID 1
(November 2009) Q&A – MiFID complex and non complex financial instruments for the purposes of MiFID appropriateness requirements and feedback statement.
(December 2008) EU financial Committees (CEBS, CESR and CEIOPS) joint guidelines for the prudential assessment of acquisitions and increases in holdings in the financial sector
(May 2007) Recommendations on the passport under MiFID and feedback statement.
(May 2007) Q&A on best execution under MiFID and feedback statement.
(May 2007) Recommendations on inducements under MiFID.
(May 2007) Level 3 guidelines on MiFID transaction reporting.
(February 2007) Level 3 recommendations on the list of minimum records in article 51(3) of the MiFID Implementing Directive and feedback statement
(February 2007) Guidelines and recommendations on publication and consolidation of markets data and feedback statement
(April 2005) Technical advice on possible implementing measures of MiFID and feedback statement – first mandates (extended) and second mandates.
(February 2005) Technical advice on possible implementing measures of MiFID and feedback statement – first mandates

UK transposition of MiFID1

See the FSA MiFID1 Library, for links to FSA and other documents relating to the implementation of MiFID1 in the UK

(2007) How UK transposed MiFID1: HMT memorandum; FSA transposition tables for MiFID1, MiFID1 implementing directive and recitals.

UK implementation

Statutory amendments arising from Brexit

The European Union (Withdrawal) Act 2018 provides for domestication of most EU law and grants powers to the UK government to correct deficiencies in this "retained EU law" arising from the UK's withdrawal from the EU. In exercise of those powers, the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 (SI 2018/1403) have been made.

This forms part of the UK Government's contingency planning for a 'no deal' Brexit and the draft Regulations are intended to ensure the UK has a functioning statute book in a 'no deal' scenario. In the event that agreement is reached between the UK and the EU and the Withdrawal Agreement comes into effect, these Regulations may be further amended (including during the agreed transitional period until the end of 2020) to reflect any future relationship between the UK and the EU. For further information, please see the Brexit Topic Guide.

Legislation

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

HM Treasury (HMT)

(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

Financial Conduct Authority (FCA)

Policy statements

(7 October 2019) Update to the Supervisory Statement on the Operation of the MiFID Transparency Regime post-Brexit
(4 March 2019) Statements of policy on the operation of the MiFIR transparency regime in the event of a no-deal Brexit
(3 July 2017) Second policy statement (PS17/14) | webpage
(31 March 2017) First policy statement (PS17/5) | press release

FCA MiFID webpage

Consultations

(3 July 2017) Sixth consultation (CP17/19) | webpage
(31 March 2017) Fifth consultation (CP17/8) | webpage
(23 January 2017) CASS 7A & the Special Administration Regime Review (CP17/2), which seeks feedback on minor consequential changes to CASS 7 and CASS 7A to address indirect clearing requirements under EMIR and MiFIR RTS | webpage
(16 December 2016) Fourth consultation (CP16/43) on implementation of MiFID2, including specialist conduct of business regimes, the tied agents regime, SME growth markets and market data as well as other matters | press release
(29 September 2016) Third consultation (CP16/29) on implementation of MiFID2 on conduct of business issues and other matters | press release
(29 July 2016) Second consultation (CP16/19) on implementation of MiFID2 | press release
(15 December 2015) First consultation (CP15/43) on implementation of MiFID2, which mainly covers secondary trading of financial instruments | press release

Other materials

(8 November 2019) Statement on MiFID II inducements and research
(19 September 2019) Implementing MiFID II - multi-firm review of research unbundling reforms | press release
(13 March 2019) Statement on various MiFID obligations and benchmarks regulation if the UK leaves the EU without an implementation period in response to ESMA statement dated 7 March 2019
(14 June 2018) FCA list of cooperation agreements on outsourcing of portfolio management
The FCA's Applications and notifications webpage sets out guidance on applications and notifications under MiFID2 alongside the general guidance note on the authorisation process, forms and prudential categories for first time applicants, and information on varying the scope of permissions for existing investment firms.
On 19 December 2016 the FCA wrote to UK market operators and UK investment firms operating trading venues regarding pre-trade transparency waivers. A joint statement between ESMA and NCAs published 28 September 2017 set out agreed procedures for opinions on MiFID II pre-trade transparency waivers and position limits
(1 August 2017) Occasional Paper No. 29: Aggregate market quality implications of dark trading

Prudential Regulation Authority (PRA)

Policy statements

(28 April 2017) Implementation of MiFID II: Part 2 (PS9/17)
(16 October 2016) MiFID II: Response to CP9/16 (PS29/16)

Consultations

(25 November 2016) Second consultation (CP43/16) on implementation of MiFID2 covering new rules on the management body and organisational requirements, granting authorisations and other consequential amendments | press release
(24 March 2016) First consultation (CP9/16) on implementation of MiFID2, covering passporting and algorithmic trading

London Stock Exchange

(13 October 2017) Requirement for issuer LEI codes
(31 July 2017) Consultation on the amendments to the Rules of the London Stock Exchange in preparation for MiFID2 and general rulebook review | Revised rules mark-up | Cross-referencing tracker tool

Clifford Chance presentations and recordings

Insights on MiFID2 - call recordings

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