AIMA

The Markets in Financial Instruments Directive (MIFID) came into force on 1 November 2007. Replacing and expanding upon the Investment Services Directive, its objective was to increase the integration and efficiency of EU financial markets.

To achieve this, MiFID established a harmonised regulatory framework for the provision of investment services in financial instruments across the EU and for the operation of regulated markets by market operators.

Following the global financial crisis, the European Commission has decided to review the MiFID framework. On 20 October 2011, the European Commission adopted proposals for (i) a revised Directive and (ii) a new Regulation (MiFIR). Between them, these proposals:

• extend the existing regime both in terms of instruments and firms covered, so that, for example, certain commodity trading firms will fall within scope of the regime;
• impose regulatory requirements on firms undertaking algorithmic trading (including HFT);
• impose position limits on the trading of commodity derivatives;
• impose restrictions on third country firms providing services in the EU;
• introduce enhanced corporate governance requirements for investment firms; and
• introduce enhanced pre- and post-trade transparency provisions in respect of both equities and non-equities.

In terms of the legislative process, the European Parliament voted on its amendments to the Commission’s proposals on 26 October 2012. The Council, however, has yet to reach a General Approach, so Trialogues (negotiations between the three European Institutions aimed at reaching an agreed Level 1 text) cannot yet start.

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Key legislative documents

MiFID I

Level 1

Text of MiFID 1 (April 2004)

Level 2

MiFID I Implementing Regulation (September 2006)

MiFID I Implementing Directive (September 2006)

Level 3

ESMA Final Report and Guidelines on certain aspects of MiFID compliance function requirements (July 2012)

ESMA's Final Report - Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities (April 2012)

CESR Guidelines on MiFID Transaction Reporting (May 2007)

MiFID II / MiFIR

Level 1

Irish Presidency Council Compromise Text of MiFID II (April 2013)

Irish Presidency Council Compromise Text of MiFIR (April 2013)

European Parliament Plenary Text - MiFID II (October 2012)

European Parliament Plenary Text - MiFIR (October 2012)

European Commission Proposed Text of MiFID 2 (October 2011)

European Commission Proposed Text of MiFIR (October 2011)

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Consultations, legislative process and related AIMA documents

Level 1

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Other relevant documents

IOSCO Final Report - Regulatory issues raised by the impact of technological changes on market integrity and efficiency (October 2011)

ESMA MiFID Q&A - Investor Protection and Intermediaries (April 2011)

European Parliament Committee on Economic and Monetary Affairs - Report on regulation of trading in financial instruments – ‘dark pools’ etc (November 2010)

Q&A MiFID complex and non-complex financial instruments for the purposes of the Directive’s appropriateness requirements

Protocol on the Supervision of Branches under MiFID

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