Markets in Financial Instruments Directive 2014

Markets in Financial Instruments Directive 2014 (<a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014L0065-20220228">2014/65/EU</a>, commonly known as MiFID 2), is a <a href="/facts/Directive_(European_Union)/KS076mKR">directive</a> of the <a href="/facts/European_Union/6GYcR8qM">European Union</a> (EU). Together with Regulation No 600/2014 it provides a legal framework for securities markets, investment intermediaries, in addition to trading venues. The directive provides harmonised regulation for investment services of the member states of the <a href="/facts/European_Economic_Area/6c4T2eDE">European Economic Area</a> — the <a href="/facts/Member_state_of_the_European_Union/hsFC1pJH">EU member states</a> plus <a href="/facts/Iceland/E4KGYs2j">Iceland</a>, <a href="/facts/Norway/wlDRKRTR">Norway</a> and <a href="/facts/Liechtenstein/dPnsqDnS">Liechtenstein</a>. Its main objectives are to increase competition and <a href="/facts/Investor_protection/JEVPRsyV">investor protection</a>, as well as level the playing field for market participants in investment services. It repeals Directive 2004/39/EC (MiFID 1).
MiFID 1 was a cornerstone of the <a href="/facts/European_Commission/Cc5JgbEI">European Commission</a>'s <a href="/facts/Financial_Services_Action_Plan/Ee0uYmum">Financial Services Action Plan</a>, whose measures changed how EU financial service markets operate. It is the most significant piece of legislation introduced in the <a href="/facts/Lamfalussy_process/nJ4pQdHA">Lamfalussy process</a> designed to accelerate the adoption of legislation based on a four-level approach recommended by the <a href="/facts/Committee_of_Wise_Men_on_the_Regulation_of_European_Securities_Markets/rfxda4Qg">Committee of Wise Men</a> chaired by Baron <a href="/facts/Alexandre_Lamfalussy/GF1AshVC">Alexandre Lamfalussy</a>. There are three other "Lamfalussy Directives": Directive 2003/71/EC, replaced with Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, the market abuse directive, and Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market.
MiFID 1 retained the principles of the EU "passport" introduced by Directive 93/22/EEC but introduced the concept of "maximum harmonization", which places more emphasis on home state supervision. This is a change from the prior EU financial service legislation, which featured a "minimum harmonization and mutual recognition" concept. "Maximum harmonization" does not permit states to be "super equivalent" or to "<a href="/facts/Gold-plating_(European_Union_law)/aJ9ppVUJ">gold-plate</a>" EU requirements detrimental to a "level playing field". Another change was the abolition of the "concentration rule" in which member states could require investment firms to route client orders through regulated markets.
MiFID 1, implemented through the standard <a href="/facts/Co-decision_procedure/FL8nttyH">co-decision procedure</a> of the <a href="/facts/Council_of_the_European_Union/xlE6rYKb">Council of the European Union</a> and the <a href="/facts/European_Parliament/H9WLUd1r">European Parliament</a>, set out a detailed framework for the legislation. Twenty articles of this <a href="/facts/Directive_(European_Union)/KS076mKR">directive</a> specified technical implementation measures (Level 2). These measures were adopted by the European Commission based on technical advice from the <a href="/facts/Committee_of_European_Securities_Regulators/JRhrkzAg">Committee of European Securities Regulators</a> and negotiations in the <a href="/facts/European_Securities_Committee/w0S2tGbS">European Securities Committee</a>, with oversight by the European Parliament. Implementation measures in the form of a Commission Directive and Commission Regulation were officially published on 2 September 2006.
After its initial implementation, MiFID 1 was intended to be reviewed. After extensive discussion and debate, in April 2014, the <a href="/facts/European_Parliament/H9WLUd1r">European Parliament</a> approved both MiFID 2, an updated version of MiFID 1, and its accompanying Regulation (EU) No 600/2014. The directive and regulation include fewer exemptions and expand the scope of MiFID 1 to cover a larger group of companies and financial products. Both MiFID 2 and Regulation (EU) No 600/2014 have been effective from 3 January 2018.

Markets in Financial Instruments Directive 2014 open-in-new

Markets in Financial Instruments Directive 2014