MiFID

MiFID, short for Markets in Financial Instruments Directive, is a cornerstone of the European Union's financial market regulation. It provides a unified framework for the authorization of investment firms, the operation of trading venues, and the provision of investment services across the EU. The directive is designed to promote competition, increase transparency, and strengthen protection for investors.

Originally adopted in 2004 as Directive 2004/39/EC and implemented from 2007, MiFID established a common set of conduct of business rules, a passporting regime for cross-border service provision, and a framework for the regulation of traded instruments such as stocks, bonds, derivatives, and structured products. It also introduced formal requirements for best execution, suitability, and disclosure.

To address market changes and new products, MiFID II and its accompanying regulation MiFIR were adopted in 2014 and took effect in 2018. The package expands scope to non-equity instruments, strengthens pre- and post-trade transparency, tightens rules on trading venues, improves governance of financial products, requires independent research unbundling in relation to investment advice and execution, and enhances supervisory powers of national authorities and the European Securities and Markets Authority (ESMA).

MiFID II/MiFIR also imposes more extensive reporting obligations, improves governance of product design, and sets rules intended to mitigate conflicts of interest, including inducements and information to clients. It introduced new requirements for algorithmic and high-frequency trading, trading venue competition, and cross-border supervisory cooperation.

Together, MiFID and its successor framework shape EU investment firms, asset managers, brokers, and exchanges, influencing market structure and investor protection. The regimes are transposed into national law by member states and are implemented by national competent authorities under the coordination of ESMA.

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