The preparatory work on MiFID II and MiFIR began one year after the entry into force of MiFID. The regulator has focused on correcting the weaknesses observed during the 2008 financial crisis and adapting to new market practices and developments (emergence of high-frequency trading, commodity price volatility, increased use of other-the-counter transactions). The aims therefore are to improve security, transparency and the way in which the financial markets work, while enhancing investor protection.
The European Commission has started the process of revising the MiF Regulation and Directive. Initial proposals were published on 25 November 2021 with the aim of adopting the text by the end of 2022. The recast aims to implement the Capital Markets Union by enhancing market transparency, improving investor access to key market data and supporting the competitiveness of European financial centres.
The MiFID II/MiFIR regulatory package consists chiefly of a directive and a regulation:
- Directive 2014/65 UE of 15 May 2014 ("MiFID II") governs the activities of investment firms, sets out investor protection rules and lays down minimum requirements regarding penalties.
- Regulation 600/2014 of 15 May 2014 ("MiFIR") addresses in particular the organisation of markets, access to the European market for third-country investment firms and the powers of supervisory authorities.
Initially scheduled for 2017, MiFID II entered into force on 3 January 2018.
These provisions are supplemented by numerous level 2 and 3 texts.
SCOPE OF APPLICATION
The provisions of MiFID II and MiFIR affect, to varying degrees, all participants in the asset management value chain, all financial instruments and all investment firms.
All parties involved, investment firms and asset management companies must change their governance practices, as well as their systems for assessing employee skills, managing conflicts of interests and recording data.
MiFID II sets out a new framework for investment services and financial instruments. The issues addressed can be grouped together according to the two main objectives.
- Protect investors
|Modification of current requirements of "suitability" and "appropriateness"|
|New notion of product governance which defines two kinds of obligations for product manufacturers and distributors|
|Evolution of investment advice : Independent investment advice and non independent investment advice|
|Prohibition for investment firms to receive inducements with the exception of payments or non-monetary benefits which meet the following requirements|
Reinforce MiFID I requirements
|Best execution and best selection policies are clearly distinguished|
|Costs and charges related to investment services, ancillary services and financial instruments|
|Obligation to report to the client when the overall value depreciates by 10%|
|Safeguard client’s assets and keep all necessary recordings|
The obligations relating to fees and charges pursuant to MiFID II dovetail with those introduced by PRIIPs. Find out more.
- Increase transparency
|Market structures are reformed, two new types of « venues » are introduced|
|High Frequency Trading has to be regulated|
|New pre and post trade requirements apply to all market players|
|Enlarge transaction reporting obligations|
|Set up a reporting on commodities positions|
|Reinforce transaprency: risk management|
CHALLENGES AND SOLUTIONS
You can count on CACEIS to guide you through the implementation of MiFID II. Please do not hesitate to contact your usual sales contact for further information.
FIND OUT MORE
> AMF has a page dedicated to the revision of the Markets in Financial Instruments Directive (MiFID II).
> ESMA has a page dedicated to MiFID II on its website:
20 October 2011
REVISION OF MIFID I - European Commission's legislative proposal amending the MiFID directive is adopted
12 June 2014
PUBLICATION OF MIF II - MiFID II and MiFIR are published in the Official Journal of the European Union
3 July 2017
TRANSPOSITION INTO NATIONAL LAW - MiFID II must be transposed into national law
FINALIZATION OF TRANSPOSITION INTO FRENCH LAW - The Decree of 03/07/2017 and Decree No. 2017-1253 finalize the transposition of the MIF II regulation into French law
3 January 2018
ENTRY INTO APPLICATION OF MIFID II - The MiFID II directive comes into force
7 February 2020
The European Commission launched a consultation to collect data on MIFID2. The aim is to obtain feedback on the experience of the last two years in order to make adjustments in the context of a possible reform of MIFID2. The deadline for responses originally scheduled for 20 April has been extended to 18 May 2020.European Commission consultation
9 June 2020
Publication by European Commission of draft delegated acts revising MiFIDDraft delegated acts revising MiFID
2 August 2021
Publication in the OJEU of the delegated acts revising MiFID to integrate ESG factors into risk management and client preferences and product governance
25 November 2021
Publication by the Commission of proposals to revise the Regulation (MiFIR) and the Directive (MiFID)
2 August 2022
Entry into force of the new Delegated Regulation amending Delegated Regulation 2017/565 on ESG risk management and client ESG preferences.
22 November 2022
Entry into application of the new Delegated Directive amending Delegated Directive 2017/593 on product governance (transposition to be done at national level before 21 August 2021).