May 4, 2020


The Markets in Financial Instruments Directive II (MiFID II) was the largest overhaul of financial services regulation of the decade. The directive impacts the entire investments lifecycle as it enhances and expands regulation of financial institutions within the European Economic Area (EEA) as well as those providing services cross-border.

MiFID II applies to those financial services businesses undertaking MiFID business anywhere in the EU as well as those providing services cross-border. 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 impacts all areas of Pershing and provides clients and particularly wealth managers with increased obligations.

MiFID II took effect from 3 January 2018.

What are the core objectives of MiFID II?

The overarching aim of MiFID II/MiFIR is to “level the playing field in financial markets” by rectifying their inefficiencies, improving their functioning, and ensuring greater transparency and resilience.

  • Increased market transparency
  • Increased investor protection
  • Increased integrity of the market and financial stability
  • Increased supervisory powers
  • Technical innovations
  • Increased oversight of commodity markets
  • High standards for managerial competence
  • Increased harmonization of administrative sanctions
  • Increased alignment of regulation across the European Union (EU)
Recent Developments

Two years after MiFID II’s implementation, ESMA is undertaking post-implementation reviews of the requirements. This will not be another big bang implementation but instead is expected to be a staggered approach to focus on making changes to the pieces that have not worked as expected (costs & charges, product governance and research unbundling obligations) and also to fine tune third-country provisions (notably as the UK becomes a third country) and the transparency measures (the double volume cap, the SI regime, algorithmic trading, the trading obligation for derivatives, SME growth markets and the functioning of organised trading facilities (OTFs).