MiFID II: Definition, Regulations, Who It Affects, and Purpose

The Markets in Financial Instruments Directive II (MiFID II) is a European Union (EU) law that was adopted in 2014 and came into force in 2018. The directive is designed to improve the regulation of financial markets and protect investors.

MiFID II covers a wide range of financial instruments, including equities, bonds, derivatives, and structured products. It also applies to a wide range of financial firms, including banks, investment firms, and asset managers.

The directive sets out a number of requirements for financial firms, including:

* **Transparency requirements:** Financial firms must provide investors with clear and accurate information about the products they are selling.
* **Conflict of interest rules:** Financial firms must manage conflicts of interest in a way that protects investors.
* **Custody rules:** Financial firms must hold client assets in a safe and secure manner.
* **Reporting requirements:** Financial firms must report to regulators on their activities.

MiFID II is intended to make financial markets more transparent and fair, and to protect investors from fraud and abuse. The directive has been praised by regulators and consumer groups, but it has also been criticized by some financial firms who argue that it is too complex and burdensome.

MiFID II is a significant piece of legislation that has had a major impact on the financial services industry. The directive is still relatively new, and it is too early to say definitively how effective it has been in achieving its goals. However, there is evidence that MiFID II has made financial markets more transparent and that it has helped to protect investors.

**Who is affected by MiFID II?**

MiFID II applies to a wide range of financial firms, including banks, investment firms, and asset managers. The directive also applies to individuals who work in the financial services industry, such as traders, analysts, and salespeople.

**What is the purpose of MiFID II?**

The purpose of MiFID II is to improve the regulation of financial markets and protect investors. The directive sets out a number of requirements for financial firms, including transparency requirements, conflict of interest rules, custody rules, and reporting requirements. These requirements are designed to make financial markets more transparent and fair, and to protect investors from fraud and abuse.