MIFID II to transform Europes's Financial IndustryOn 3 January 2018, the updating of the Markets in Financial Instruments Directive (MiFID II) and the accompanying Regulation (MiFIR) will enter into force in Europe. By focusing on core principles of creating fairer, safer and more efficient markets, this most comprehensive law of the financial industry will significantly change market structures. Now is the time to select and integrate systematic solutions to prepare for this major regulatory change
What is MIFID IIA revamped version of the Markets in Financial Instruments Directive, or Mifid II, is designed to offer greater protection for investors and inject more transparency into all asset classes: from equities to fixed income, exchange traded funds and foreign exchange.
When will it StartMIFID came into force in Nov 1 2007. Following the global financial crisis , in 20 October 2011 ,European commission reviewed the framework and published proposal for Revised Directive MIFID II and Revised regualtion MIFIR.
On April 15 the final text of proposal was adopted , which was aimed at the resolving the shortcomings of the MIFID frameworks that lead to the financial crisis. Due to a proposed delay by the European commission , the implementation has run over 3 years to Jan 2018.
What you need to KnowThe high level goals of MiFID II are:
- Increased transparency of markets
- A shift in trading towards more structured marketplaces
- Lower cost market data
- Improved best execution
- Orderly trading behaviour within markets
- More explicit costs of trading and investing
How will MIFID II affects investment decisions?
Recent European-wide regulation requires all research to be separately priced and unbundled from execution, marking a considerable change in the way in which research is distributed by the sell side and consumed by the buy side. MiFID II states that asset managers can only receive research services which they pay for and cannot receive research for free. Sell side firms must price their research services and restrict access only to their paying customers. These major elements along with additional details have been covered by key pieces from the regulators which we have gathered below.