MiFID II & MiFIR: A Transformation of the Financial Services Industry?
3 January 2018 is an important date for everyone working in the financial services industry, because it is the date on which the MiFID II Directive (2014/65/EU)) and the Markets in Financial Instruments Regulations (Regulation 600/2014)) come into force.
What is MiFID?
Back in 2007, the first MiFID directive (2004/39/EC) came into force. It provided a comprehensive framework for investment services and activities for the European Economic Area, including the UK.
Why is MiFID II needed?
MiFID II and, to a lesser extent, MiFIR update the 2007 directive. They are designed to do a number of things:
- to address the significant advances in technology and complexity of investment products since 2007;
- to improve transparency, efficiency and market integrity (partly as a response to the fallout from the 2007/8 financial crisis); and
- to regulate the trading venues of a significant portion of “over-the-counter” trades.
What will change?
In a word, everything. MiFID II and MiFIR comprise over a million paragraphs of rules. They will transform the regulation of the financial services industry in the UK and throughout the EEA. Some of the main changes are:
- a requirement for investment firms to be authorised by the national authority in the member state where they have their registered office (in the UK, this is the PRA and the FCA);
- the creation of an “EU passport” that will enable investment firms authorised in one member state to provide services in another without the need for additional authorisation;
- enhanced organisational and conduct of business requirements aimed at increasing protection for investors;
- new financial products (such as structured deposits and emission allowances) and new services (including organised trading facilities) will be regulated; and
- the introduction of a regulatory regime for securities markets (including regulated markets, multilateral trading facilities and organised trading facilities) and the introduction of wider pre- and post-trade transparency rules for trading venues.
Our Disputes team has extensive banking and finance litigation experience and is well placed to advise on the complex issues that arise within the financial services sector.
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