Market in Financial Instruments Directive (MiFID II)
MiFID is the key European legislation that provides the basis for providing services on financial instruments in Europe. The recent revision of MiFID is an essential part of many structural reforms in the aftermath of the financial crisis. These are aimed at establishing a safer, sounder, more transparent and more responsible financial system that works for the economy and society as a whole.
The main objectives of the revision are:More Robust and Efficient Market Structures
- Better controlling Over-The-Counter trading (OTC) and dark trading.
- Small- and medium-sized enterprises, SMEs, should have better access to capital markets; the revised MiFID introduces a specific label for their market.
- Algorithmic and high frequency trading will face tougher regulation in order to prevent systemic risk and to increase market integrity.
- Improved conditions for competition in essential post-trade services, such as clearing, by improving access possibilities by trading venues into clearing houses and allow clearing houses to serve more markets.
- New trade transparency regime for non-equities markets (i.e. bonds, structured finance products and derivatives).
- Improved data quality, facilitating data consolidation so that investors will have an overview of all trading activities in the EU, helping them make a more informed choice.
- Reinforced role and powers of regulators, in coordination with the European Securities and Markets Authority (ESMA).
- Financial regulators to monitor and intervene at any stage in trading activity in all commodity derivatives, including in the shape of position limits if there are concerns about disorderly markets.
- Stricter requirements for portfolio management, investment advice and the offer of complex financial products such as structured products, in order to prevent potential conflict of interest.
- Rules on corporate governance and managers' responsibility are enhanced for all investment firms.
Secondary implementation legislation is currently being developed. The revised MiFID rules are to come into effect in 2017.
Nasdaq has responded to several consultations regarding the review of MiFID.