Before we dive into the specifics of MiFIR / MiFID II, let’s look at the background and history. The Markets in Financial Instruments Directive (MiFID) has been in force in Europe since November 2007. The purpose of MiFID is to regulate Europe’s financial markets. MiFID provides a level of protection for investors who purchase or invest in investment services and activities as well as other financial products.
The overarching goal of MiFID is to ensure a high degree of protection for investors in financial instruments and to avoid market abuse altogether.
In short, MiFID helps to ensure the following:
- The proper conduct, processes, and activities of businesses, organisations, and investment firms
- Regulatory reporting
- Increased transparency among trade-related transactions and shares
- Requirements surrounding financial instruments in trading
- Requirements for regulated markets
Even though MiFID has been in force since 2007, why are organisations and enterprises still talking about it today? In October 2011, the European Commission proposed a revised version of MiFID, which involved a revised Directive and a new Regulation.
Approximately two years later, the European Union adopted the new MiFID, which became known as MiFID II and MiFIR.