The biggest shake-up of European financial services regulation in a decade is perhaps the most loaded phrase used to describe the Markets in Financial Instruments Directive II (MiFID II). The EU legislation is designed to reduce systemic risk and make markets safer and fairer for investors, and less likely to collapse into crisis.

Although it came into effect just a few months ago, on 3 January 2018, the legislation’s gestation stretches back some seven years. An ambitious regulatory endeavour encompassing 7000 pages and approximately 1.5 million paragraphs of rules, it has, in that time, become something of a spectre for many financial services industry operators.

According to a 2017 report by Thomson Reuters – ‘MiFID II Solutions & Services’ – MiFID II represents “one of the most fundamental and far reaching regulations that the industry is addressing”. Furthermore, states the report, “its effect is not just in the European Union (EU), its ripples will reach far out into the global financial industry, impacting all financial organisations that deal with the European markets”.

In ‘MiFID II: Are you ready for the new regime?’, PwC describes MiFID II as “the most significant change to the conduct of financial services and the market environment since the commencement of the EU Commission’s Financial Services Action Plan”. The legislation, says the PwC analysis, “will affect all categories of dealing, broking, asset management and advisory services undertaken by banks, non-banks, other service providers and also their corporate, institutional and retail customers”.

Apr-Jun 2018 Issue

Fraser Tennant