MiFID II key concerns
University of Wolverhampton, Wolverhampton, UK
Purpose –This paper aims to discuss key concernssurrounding the recent implementation of the Markets
in FinancialInstruments Directive (MIFID II). It focuses on the UK regime. The insightsderived are envisaged
to be helpful guidesfor participants and regulators in ﬁnancial markets.
Design/methodology/approach –This paper usedthe legal-economics perspective. It reliedon primary
data from statutes and regulations and secondarydata from the public domain to analyze the phenomenon.
The analytical framework comprised the following sections: Introduction, MiFID I review, MiFID II scope,
MiFID II key concernsand concludingremarks.
Findings –Only half of the EU Member States includingthe UK managed to transpose MiFID II within the
3rd January 2018 effective date. At this early stage of implementation, various teething problems were
encountered. These pertained to costs and charges reporting, ﬁrm governance, product governance,
transactionreporting, best execution and research. Owing to the sheerscale and complexity of MIFID II, most
entities barely coped with their reportingobligations. Noting the situation, the Financial Conduct Authority
assuredﬁrms taking all sufﬁcient steps that they would be treated fairly.
Research limitations/implications –The paper was not sufﬁciently empirical. However, the study
beneﬁted reasonably from triangulation of data and perspectives to provide good insights on the
implementation effectsof the complex and voluminous EU rules for governing ﬁnancial marketswith global
Practical implications –Investors could gain from the enhanced transparency and best execution
rules. Investment banks could gain from the emerging resilient, integrated and efﬁcient ﬁnancial markets.
Regulators with better access to more and higher quality reporting could intervene more effectively when
Originality/value –This paper assembled andcritically analyzed currently available research insightsin
these areas so as to provide useful guidanceto those needing to work and comply with MiFID II rules and
academicsteaching ﬁnancial services law.
Keywords MiFID II, Dark pools, High frequency trading, MiFIR, Organised trading facility,
Paper type General review
The Markets in Financial Instruments Directive (MiFID I) became effective in the EU on
November 1, 2017 (EuropeanCommission (EC), 2004). MiFID I replaced the 1993 Investment
Services Directive that was not particularly effective. MiFID I provided a harmonized
regulation for investment services to increase competition and consumer protection in
investment services in the European Economic Area (Haas, 2007). At its core, MIFID I is a
market-construction measure, but also equally a regulatory measure of unrivaled scale and
complexity in EC investmentservices law (Moloney, 2008).
This regulatory convergence phenomenon (Chiu, 2007) constituted at the time a new
development in EU governance in ﬁnancial services and markets regulation following the
1999 Financial Services Action Plan (FSAP) and the 2001 Lamfalussy Report. MiFID I
included an updated and expanded passportsystem so as to create a level playing ﬁeld and
eliminate remaining barriersto the provision of cross-border ﬁnancial services (Haas, 2007).
It complemented four other earlier Directives pertaining to Market Abuse, Prospectus,
Journalof Financial Regulation
Vol.27 No. 1, 2019
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