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 applied from 3 September 2019. MiFIR and most provisions of the Delegated Regulations, regulatory technical standards (RTS) and implementing technical standards (ITS) applied 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) introduced changes to the third country access provisions under MiFID2 and MiFIR, from June 2021.

The transitional opt-out from MiFIR open access requirements in relation to ETDs ended on 3 July 2021, however it is expected to be extended by two years to 3 July 2023.

On 26 February 2021, Directive (EU) 2021/338 amending MiFID2 as regards information requirements, product governance and position limits (MiFID2 Quick Fix), adopted as part the Commission's Capital Markets Recovery Package in response to COVID-19, was published in the Official Journal. It entered into force on 27 February 2021 and has applied since 28 February 2022. Member States were required to transpose the amendments into national law by 28 November 2021. The amendments cover investor protection, commodity derivatives and research.

On 2 August 2021, Delegated Directive (EU) 2021/1269 amending (EU) 2017/593 as regards the integration of sustainability factors into product governance obligations and Delegated Regulation (EU) 2021/1253 amending (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms were published in the Official Journal. The amendments to the Delegated Directive applied from 22 November 2022. The amendments to the Delegated Regulation applied from 2 August 2022.

On 25 November 2021, the Commission adopted a Capital Markets Union (CMU) legislative package including a proposal for a regulation amending MiFIR and a directive amending MiFID2, including proposed changes to the EU equities and non-equities transparency regimes, transaction and financial instrument data reporting, the share and derivatives trading obligations, payment for order flow (PFOF) and best execution reporting. The EU Council agreed its negotiating position on MiFIR2/MiFID3 on 20 December 2022 and the EU Parliament's Committee on Economic and Monetary Affairs (ECON) adopted reports on the proposals on 1 March 2023. EU Parliament and Council negotiators reached a provisional political agreement on 29 June 2023. The Parliament's plenary approved MiFIR2 and MiFID3 on 16 January 2024. Further information in the MiFID2/MiFIR Review section below.

On 29 April 2022, ESMA published a final report on certain retail investor protection topics under MiFID2 setting out technical advice to the Commission on legislative proposals to implement aspects of the retail investment strategy. The Commission published a call for evidence on the retail investment package on 3 May 2022 and is expected to adopt proposals in Q1 2023.

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