Executive Summary

The original MIFID was implemented in November 2007. MIFID2 is a heavily revised updated version with a significant extension in its coverage whilst also reflecting recent market developments (eg HFT). The final MIFID2 text was published by the European Commission (EC) in October 2011 and is now with the European Parliament and Member States for ‘negotiation and adoption’. MIFID2 is one of a number of new EU directives drawn up in the aftermath of the recent banking crisis which will bring far reaching mandatory change to the UK financial services sector.

ea Consulting Group’s view is that MIFID2 moves European regulation from a principles based approach to a US-style rules based regime. It is a goal of the EC to create a single rule book where national regulators (eg FSA or FCA) will simply act as the local supervisor of a harmonized pan-European legislation. The MIFID framework will be extended across all asset classes and into markets where pre and post-trade transparency have never existed with major implications for OTC (over-the-counter) operations. MIFID2 is closely linked with EMIR (European Markets Infrastructure Regulation) due to be implemented in December 2012.