FCA on MiFID II and the Future of European Trading

Directive 2004/39/EC, the Markets in Financial Instruments Directive (MiFID), governing the provision of investment services in financial instruments by banks and investment firms and the operation of traditional stock exchanges and alternative trading venues, has been in force since November 2007. Considered to be a core pillar in EU financial market integration, MiFID has been credited with creating competition between these services and bringing increased choice and lower prices for investors. However, the financial crisis revealed weaknesses and with the aim of making financial markets more efficient, resilient and transparent, and to strengthen the protection of investors, the European Commission published its legislative proposals regarding MiFID II and Markets in Financial Instruments Regulation (MiFIR) in October 2011. These entail wholesale reform that will change financial markets, banking services and the bank-customer relationship.

In April 2014, MiFID II and MiFIR were endorsed by the European Parliament. In May 2014, the Council of the European Union adopted the legislation. Subsequently, the MiFID II legislation came to be published in the Official Journal of the European Union in June 2014. In July 2014, MiFID II and MiFIR entered into force. They must generally apply within Member States by January 2017. It is therefore unsurprising that the Financial Conduct Authority (FCA) considers this legislation to be “the future of European trading in the balance” and has hosted a conference on it.