Since 2007, the aim of the Markets in Financial Instruments Directive (MiFID) has been to establish a regulatory framework for the provision of investment services in financial instruments and for the operation of regulated markets by credit institutions and market operators within the European Union financial markets.
MiFID II revises and completes the rules currently in place. In particular, the scope of regulated products and activities is extended.
Towards a more comprehensive and stringent legal framework
MiFID II aims at establishing a safer, sounder, more transparent and more responsible financial system, in particular by:
- extending market transparency,
- strengthening investor protection,
- providing partially harmonised rules for the access of third country firms to the EU market,
- ensuring harmonised administrative sanctions and effective cooperation between authorities,
- improving competition in trading and clearing of financial instruments.
Investment funds, their management companies, alternative investment fund managers (AIFM) and depositaries are in principle excluded from the scope of MiFID II
However, MiFID firms are servicing the entire fund industry up and down the value chain. MiFID II is therefore not without impact on investment funds, management companies and AIFMs.
When will MiFID II become applicable?
National transposition of the recast directive is due to be completed by 3 July 2017 at the latest.
The new MiFID II regime will be applicable as from 3 January 2018 onwards.
Main impact on the investment fund industry
Other key features and new requirements of the MiFID II regime may directly or indirectly affect the investment fund industry, for instance in terms of investor protection, transparency or reporting.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.