MiFID II and MiFIR Reviews


January 13, 2022

MiFID II/MiFIR post-implementation reviews, proposed changes and unintended consequences.

Explore our insights and what this might mean for your firm.


The Markets in Financial Instruments Directive II (MiFID II) has applied since January 2018 and was the largest overhaul of financial services regulation of the decade. MiFID II impacts the entire investments lifecycle and enhanced and expanded regulation of financial institutions, their services and activities within the European Economic Area (EEA). This includes investment firms, trading venues, data reporting service providers and third country firms providing investment services or performing investment activities into the EU (either on a services basis or via a branch). MiFID II requirements govern many areas of Pershing’s and its clients' (particularly wealth managers) business.

MiFID II/MiFIR Reviews

MIFIR/MiFID was implemented over three years ago and as expected it is subject to a number of post implementation reviews and proposed changes.

The European Securities Markets Authority (ESMA) has published final reports with proposals relating to, among other items, pre- and post- trade transparency (the double volume cap, the systematic internaliser (SI) regime, algorithmic trading, the trading obligation for derivatives, small and medium-sized enterprises (SME) growth markets and the functioning of organised trading facilities (OTFs)), transaction reporting, and investor reporting. These reviews are not another ‘big bang’ implementation but instead propose targeted changes to the requirements that have not worked as expected (costs and charges, product governance and research unbundling obligations). Changes are also made in the context of the UK having left the EU. For more details on these reviews and how they impact the UK market vs EU please see the divergence tracker below.

As at 2 December 2021, we are awaiting the European Commission’s (EC) response to the proposals contained within ESMA’s final reports.

EU MiFID II ‘Quick Fix’ Directive

Separately and in response to the Covid-19 pandemic, the EC published the ‘Quick Fix’ Directive in February 2021 with changes to, among other things, phase-out of paper-based communication, exempt costs and charges disclosure for eligible counterparties and professional clients, disapply research charges, and suspend best execution reports for venues (RTS 27). The aim was to streamline specific requirements of MiFIR/MiFID II, whilst allowing for more flexibility for wholesale clients.

You can see a summary of these changes in the divergence tracker below.

Please see Frequently Asked Questions on the right-hand side of this page for further information on the key aspects of the MiFID 'Quick Fix' Directive.

In addition to the Quick Fix, we’ve also recently seen the EU Commission publish proposals to amend MiFIR/MiFID including dark trading, market data and the establishment of a Consolidated Tape Provider (CTP) and the banning of Payment for Oder Flow (PFOF). While this is a technical paper with changes to the European market structure landscape, a key point to call out is the continuing divergence between EU and UK approaches (i.e. on dark trading the UK proposed getting rid of DVC vs. EU proposing to slightly reducing the limits). Any EU changes will probably take a while to implement, and we’ll likely hear on the final UK approach first when Wholesale Market Review outcome is published.


Reacting to changes in the EU Quick Fix, in April 2021 the FCA published its first consultation paper on changes to UK MiFID’s conduct and organisational requirements. The final policy statement published in November 2021 (PS21/2) confirms changes in two areas: best execution reporting and research.

In addition, in July 2021, HM Treasury published two important publications, the UK Wholesale Markets Review and changes to the Markets in Financial Instruments (Capital Markets) (Amendment) Regulations 2021.

The amendments to MiFID II are a result of HM Treasury’s and the FCA’s engagement with financial services firms to identify obligations imposed on investment firms which are costly for firms to implement and fail to serve their intended objectives.

The proposed changes set out in the Wholesale Markets Review focus first on immediate changes to remove the most ineffective and distortionary regulatory requirements for the UK market—for example, HM Treasury cites.

Rules such as the share trading obligation, which seek to restrict access to global stock markets, run exactly counter to our principles of openness and competition. The double volume cap was well-intentioned but has no basis in evidence.”

The Review also consults on extending electronic communications as the default for investor reporting to retail clients and also make wider changes to the transparency regime aiming to simplify the current requirements, increase the UK’s competitiveness and deliver better outcomes for consumers. Areas for review include, recalibrating the transparency regime for fixed income and derivatives, amending the reference price waiver (RPW) to encourage best execution, amending the market data/consolidated tape regime, simplifying the systematic internaliser (SI) regime, and changes targeting small and medium-sized enterprises (SME) growth markets, amongst others.

UK/EU Divergence

For firms operating in the EU and UK, regulatory change planning has become more difficult with divergence across new and changes to existing regulation, the review of MiFID II being a prime example. While the UK on-shored MiFID II as result of Brexit and starts from a position of a harmonised rulebook, it is becoming clear that the UK will consider to what extent the proposals made by the EU will be adopted by the UK. The UK is now also making its own amendments to requirements the EU has not sought to change.

Please see more details in the divergence tracker below.

Linda Gibson, Director of Regulatory Change (December 2021)

Regulatory divergence should very much be the focus of individuals at both EU and UK firms charged with reviewing and advising the business on the impact of proposed changes to MiFID II.

FCA and the UK government’s publications to the on-shored UK MiFID II regime are focused on what is best for the UK market and the changes announced are largely good news and should result in the removal of various regulatory burdens for firms. The focus is to make the City of London more competitive as a global trading stage and shift liquidity from the EU to UK trading venues.

We now have two regulators moving in different directions and with different priorities which will have a significant impact on firms who need to be able to integrate the amendments into their wider business strategy and look out for more amendments to be announced as they are drip fed through.

As can be seen from the above Reviews Timeline, we expect further consultations to be published in 2022 by both the EU and UK regulators. For example, we expect further consultation papers to be published by the FCA once the Treasury’s Wholesale Market Review is finalised, as this will essentially provide a ‘to-do list’ of changes the FCA will have to address in their rulebook. Clearly tracking and interpreting all things MIFID II will be more complicated for both EU and UK firms going forward especially around market access, solicitation and servicing clients.

Pershing’s Regulatory Change Team continue to monitor developments in this area.

Pershing Divergence Tracker1

Overall, the impact of the MiFID II review is likely to create some confusion across the industry for firms operating across jurisdictions with potential duplication of effort and the need to work to different timelines. Given the difficulty of navigating all the changes, Pershing has started a ‘divergence tracker’ to help our business provide an overview by theme of how the EU and UK requirements are changing.

1 The Pershing Divergence Tracker (DT) is the result of a review of all the publications listed in the Annex (available on request). The DT is limited to items that Pershing believes to be of interest to its clients and is not a comprehensive assessment of all the changes to MIFID II that may apply to clients. Furthermore, the DT is not intended to be legal advice and any clients in doubt of the impact of any of the information set out in the DT should seek independent legal advice.