MiFID II is a legislative framework instituted by the European Union to regulate financial markets in the bloc and improve protections for investors with the aim of restoring confidence in the industry after the financial crisis exposed weaknesses in the system. It is a revised version of the Markets In Financial Instruments Directive, or MiFID, and was rolled out on January 3, 2018, more than six years after the European Commission adopted a legislative proposal for the revision.


MiFID II will impose more reporting requirements and tests in order to increase transparency and reduce the use of dark pools and OTC trading. Under the new rules, trading volume of a stock in a dark pool is limited to 8 percent over 12 months. The new regulations also target high-frequency trading. Algorithms used for automated trading have to be registered, tested and have circuit breakers included. MiFID II also places restrictions on inducements paid to investment firms or financial advisors by any third party in relation to services provided to clients. Banks will no longer be able to charge for research and transactions in a single bundle, forcing fragmentation and possibly improving the quality of research available to investors. Brokers will have to provide more detailed reporting on their trades, including price and volume information, and store all communications, including phone conversations. MiFID II extends the scope of requirements under MiFID to more financial instruments.

Preparations for MiFID II cost firms an estimated total of $2.1 billion, according to a report by Expand, a Boston Consulting Group company, and IHS Markit.

  1. Markets In Financial Instruments ...

    MiFID is a European Union law which standardizes regulation for ...
  2. Best Execution

    Best execution is a legal mandate that dictates brokers must ...
  3. Schedule II Bank

    A bank which is a subsidiary of a foreign bank and authorized ...
  4. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable ...
  5. Schedule I Bank

    Schedule I Bank is a Canadian financial institution structure, ...
  6. Execution

    Execution is the completion of a buy or sell order for a security.
Related Articles
  1. Insights

    Should You Be Afraid Of Dark Pool Liquidity?

    Don't fear the deep end. Dark pool liquidity can help drive down stock cost for everyday investors.
  2. Insights

    An Introduction to Dark Pools

    Dark pools are an ominous-sounding term for private exchanges or forums for trading securities; unlike stock exchanges, dark pools are not accessible by the investing public.
  3. Tech

    The Number Of Dark Pools In Cryptocurrency Trading Is Increasing

    Dark pools, which conduct trades away from cryptocurrency exchanges, are increasing in crypto trading.
  4. Personal Finance

    What To Expect On The CFA Level II Exam

    This article will help you understand the nuances of the CFA Level II exam.
  5. Tech

    Bitcoin Price Plummets Below $10K As Crypto Markets Turn Red

    After a short rally, cryptocurrency and bitcoin prices are falling again.
  6. Personal Finance

    Tips for Taking the CFA Exam: Part 1

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for taking the CFA level I, II and III exams.
  7. Personal Finance

    Tips for Taking the CFA Exam: Part 2

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for passing the CFA level I, II and III exams.
  8. Insights

    What Is the Dark Net?

    The Dark Net (or Darknet) is a subset of secret websites that exist on an encrypted network.
  9. Trading

    High-Frequency Trading: A Primer

    An in depth look at how high-frequency trading works and who the players are.
  1. How did World War II impact European GDP?

    Understand the effect of World War II on the European gross domestic product and what foreign and domestic factors influenced ... Read Answer >>
  2. Under the Investment Advisers Act of 1940, which of the following are exempt from ...

    I. EngineersII. AccountantsIII. TeachersIV. AttorneysA. I, II, III, IVB. II, III, IVC. I, IIID. II, IV Correct ... Read Answer >>
  3. What are key government regulations that affect investing in the banking sector?

    Discover how the global financial crisis of 2008 changed the face of banking in the United States and around the world by ... Read Answer >>
  4. Which of the following statements is (are) true with respect to price-earnings (P/E) ...

    The correct answer is: b) The reason choice I is true is because during a recession, corporate earnings will generally fall ... Read Answer >>
Hot Definitions
  1. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  2. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  3. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  4. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  5. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
  6. Monero

    Monero is a digital currency that offers a high level of anonymity for users and their online transactions.
Trading Center