MiFID II – Markets in Financial Instruments Directive

The Markets in Financial Instruments Directive II (MiFID II, Directive 2014/65/EU), together with the accompanying MiFIR regulation, forms the core regulatory framework for the European Union's financial markets. It replaces the original MiFID I (2004/39/EC) and establishes comprehensive requirements for investment firms, trading venues and data reporting service providers.

MiFID II pursues three core objectives: strengthening investor protection through enhanced conduct-of-business rules and product governance, increasing market transparency through extensive pre- and post-trade transparency obligations, and promoting fair and efficient markets through the regulation of new trading venue types such as Organised Trading Facilities (OTFs).

The directive was substantially revised by the MiFID II/MiFIR Review 2024 (Directive 2024/790). Key changes include the consolidation of market data through Consolidated Tape Providers, the ban on payment for order flow in retail business, optimised transparency rules for non-equity instruments, and a relaxation of the research unbundling rules.

The European Commission presented its proposal for a recast of MiFID on 20 October 2011 to address weaknesses in the original MiFID I framework that had become apparent during the 2008 financial crisis. After extensive negotiations, MiFID II was adopted by the European Parliament and Council on 15 May 2014 and published in the EU Official Journal on 12 June 2014 (OJ L 173). Application was postponed once from January 2017 to 3 January 2018 to allow market participants and supervisory authorities sufficient preparation time.

The amending Directive (EU) 2024/790 (so-called MiFID III) and amending Regulation (EU) 2024/791, both dated 28 February 2024, were published in the Official Journal on 8 March 2024. These entered into force on 28 March 2024. Member States were required to transpose the directive amendments into national law by 29 September 2025.

MiFID II applies to a broad range of market participants and financial instruments within the EU:

• Investment firms: All authorised investment firms providing investment services or activities (investment advice, portfolio management, order execution, proprietary trading)
• Credit institutions: Banks insofar as they provide investment services
• Trading venues: Regulated markets, multilateral trading facilities (MTFs) and organised trading facilities (OTFs)
• Data reporting service providers: Approved publication arrangements (APAs), consolidated tape providers (CTPs) and approved reporting mechanisms (ARMs)
• Financial instruments: Transferable securities, money market instruments, UCITS units, derivatives (including commodity derivatives and emission allowances)
• Third-country regime: Third-country firms may provide cross-border services to professional clients and eligible counterparties under certain conditions

• Investor protection and conduct rules: Comprehensive suitability and appropriateness assessments, disclosure of costs and charges, recording of telephone conversations and electronic communications
• Product governance: Manufacturers and distributors of financial instruments must define and continuously monitor target markets
• Best execution: Investment firms must take all sufficient steps to obtain the best possible result for the client
• Transparency obligations: Pre- and post-trade transparency for equity and non-equity instruments with calibrated deferral mechanisms
• Position limits: Quantitative limits on positions in commodity derivatives to prevent market abuse and excessive speculation
• Algorithmic trading: Registration requirements, risk controls, market-making obligations and specific requirements for direct electronic access
• Inducements rules: Strict restrictions on accepting and granting incentives; independent advice may not accept third-party inducements
• Research unbundling: Separation of charges for research and trade execution; the MiFID II/MiFIR Review 2024 relaxes these rules and again permits bundled payment for research and execution under certain conditions

The summary cites only the consolidated tape, PFOF ban and non-equity transparency as the 2024 review's key changes. A core element of the MiFID II/MiFIR review is, however, the relaxation of research unbundling rules. This point is absent from both the summary and key_requirements.

The successors field lists 'mifir'. However, MiFIR (Regulation (EU) No 600/2014) is not a successor of MiFID II but the contemporaneous sibling regulation, adopted on the same day (15 May 2014) and made applicable jointly on 3 January 2018. The entry's own text correctly calls MiFIR the 'accompanying regulation'. A successor relationship is factually wrong; the correct relationship is 'related'/sibling (already present in the related array).