MiFID II is a European regulation that establishes conduct, organisational and transparency requirements for certain services related to financial instruments within the European Union.
This section provides a general description of what MiFID II is and its main objectives.
This article explains in general terms what MiFID II is and how this regulatory framework operates.
What is MiFID II?
MiFID II (Markets in Financial Instruments Directive II) is the second version of the European Union’s Directive on Markets in Financial Instruments. It entered into force on 3 January 2018, expanding the previous regulatory framework.
Main objectives of MiFID II
The main objectives of MiFID II include:
Establishing conduct obligations for entities providing certain financial services.
Strengthening information requirements regarding financial instruments and their associated risks.
Introducing measures for the management of conflicts of interest.
Establishing client categories with different levels of regulatory protection.
Regulating certain forms of investment advice.
How does the MiFID II framework operate?
1. Investor classification
Different categories of clients are established with differentiated information requirements.
Retail investors: subject to a different level of regulatory protection and must receive comprehensive information on the investment and the associated risks.
Professional investors: are considered to have sufficient knowledge and experience.
2. Clear and transparent information
Entities must provide information on the risks, costs and general characteristics of financial instruments.
3. Prevention of conflicts of interest
Organisational measures are established to identify, manage and, where appropriate, disclose conflicts of interest.
4. Protection against fraud and misconduct
MiFID II introduces control and supervisory requirements. Other complementary regulations govern aspects such as the prevention of money laundering.
Applicable regulatory framework
Certain activities related to financial instruments are carried out in cooperation with authorised entities, in accordance with applicable regulations, including MiFID II, depending on the role performed by each participating entity.
The information contained in this section is for informational purposes only and does not constitute financial, legal or investment advice. The application of MiFID II does not guarantee results and does not eliminate the risk of loss of the committed capital.