As a result of the uncertainty regarding the application of MiFID to institutions and products, the lack of transparency in the relationship between clients and institutions, and the limited regulation on the investment advisory services, a proposal was published in April 2014 in order to reinforce the initial objectives of the previous regulation.
In this context, in May 2014 the European Parliament (EP) and the Council published the Directive 2014/65/EU on markets in financial instruments (MiFID II) which aims to ensure that financial markets are more secure and efficient, and to enhance the protection of investors.
This Technical Note summarises the Directive 2012/65/UE (MiFID II) content.
The Directive 2014/65/EU (MiFID II) covers aspects regarding the security measures, the efficiency and transparency of markets in order to ensure higher protection of investors and to fight against speculation, mainly in the commodity markets.
Scope of application
The Directive MiFID II shall apply to investment firms, market operators, data reporting services providers, and third-country firms providing investment services or performing investment activities through the establishment of a branch in the EU..
- Increase of investor’s protection. MiFID II sets out an increase of the investor protection through improvements in the organisation/classification of products, regulation of the advisory receipts of inducements and the attribution of more powers to European authorities.
- Increase of transparency. This Directive covers the increase of the transparency of equity markets and transparency principles for non-equity instruments. Further, new rules are established to make the consolidation and disclosure of trading data more effective.
- Reinforcement of supervisory powers. MiFID II strengthens the role and powers of regulators/supervisors and establishes more strict regimes in the commodity derivatives market.
- Introduction of controls in the use of algorithms and high frequency trading.
- Multilateral and well-regulated platforms. This Directive defines the market structure that ensures trading on multilateral and well-regulated platforms.
- Enhancement of administrative sanctions regime. MiFID II includes provisions regarding the sanctioning regime covering the effective and harmonised administrative sanctions, detection of breaches of this rule and criminal sanctions.
- Harmonised regime third countries access. This Directive establishes a harmonised regime for granting third country access to EU markets.
Download the technical note by clicking here (document available in spanish).