Mifid II

The EU’s Mifid (Markets in Financial Instruments Directive) law on investment services came into force in the UK in November 2007. It was intended to regulate firms providing services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and in the venues where those instruments are traded.

Mifid aimed to standardise regulatory disclosures for different markets; offered new requirements for transparency; and set out standards of conduct for financial firms. Further to this, the European Commission reviewed the Mifid framework and revised regulation – Mifid II – was passed by the European Parliament in 2014. The implementation date for Mifid II in European member states is 3 January 2018. According to the European Securities and Markets Authority, the legislation “will strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent”. Mifid II covers nearly all aspects of trading in the EU. Asset managers, investment managers, wealth managers and advisers will all be affected by Mifid II.

The original Mifid transaction reporting regime will be greatly expanded under Mifid II. The implementation of Mifid II has increased the number of entities needing to obtain a Legal Entity Identifier (LEI). Under Mifid II advisory firms transmitting a “reportable order” such as a client instruction will need to supply their firm’s LEI as the transmitter of the order.