MiFID II Key Issues

Latest developments

After debating more than 2000 amendments, Parliament approved an amended MiFID II text in October 2012. Negotiations in Council working groups continued into 2013, and final legislative agreement is expected towards the end of 2013, once the Parliament and Council agree on a common text.

Trialogues are taking place on a weekly basis until the end of 2013. For more information about the next meeting, please consult the "tubemap" on the main dossier page (Finance Watch members only, please log in to see this content).

Background

The review of the Markets in Financial Instruments Directive (MiFID II) aims to make financial markets more efficient, stable and transparent. It is a landmark financial reform for the EU and covers market structure, over-the-counter derivatives trading, High Frequency Trading (HFT), commodity derivative speculation and investor protection, among other topics.

The European Commission published its in October 2011, seven years after the original MiFID was adopted in 2004. The liberalisation of Europe’s trading landscape that followed MiFID had several consequences, including:

  • fragmentation of liquidity across an increasing number of venues
  • development of dark pools and over-the-counter trading (reduced transparency due to to increased complexity)
  • increased high-frequency trading

To create a better regulatory framework for these new developments as well as deadling with the consequences of the financial crisis, MiFID II aims to:

  • move trading of “standardised” derivative contracts to regulated markets (exchanges and other trading platforms) and extend the “EMIR” requirements to centrally clear over-the-counter derivatives
  • reduce the exemptions for pre-trade transparency which led to the popularity of “dark pools” (where prices and volumes are not made public prior to the trade),
  • restrict high-frequency trading and excessive speculation on commodity derivatives (most importantly in agricultural products), and
  • improve consumer protection for retail investors who buy financial products.