The European Council reached an agreement regarding the MiFID review on 21 June 2013.

This agreement and the former from the European Parliament from October 2012 established a position on the MiFID II directive and regulation and enabled the beginning of the trilogue negotiations.

On 20 October 2011, the EU Commission released a proposal for a Regulation (MiFIR) and a Directive (MiFID 2) that will extend what is currently regulated by the existing Directive on markets in financial instruments (MiFID).

The aims of MiFID

MiFID has 7 major objectives:

  1. Strengthen competition on the financial markets by renaming the concentration rules (orders need to go to the national Stock exchange) thus permitting the emergence, alongside traditional stock exchanges, of MTFs (multilateral trading facilities), which are alternative trading hubs working in a similar way to existing stock exchanges. MiFID also introduces the notion of “systematic internalisers”, i.e. banks or investment companiesĀ  that are able, provided that certain conditions have been fulfilled, to execute the orders of their customers instead of a Stock exchange.
  2. Improve investor protection through a series of “know your customer” (KYC) measures requiring stringent rules of conduct and good internal organisation of the financial institutions.
  3. Provide improved information for customers about the nature of the services and products, the duration of the investment, the costs and commissions involved.
  4. Encourage cross-border transactions by enabling more services and products to be supplied from one Member State to another on the basis of a European passport, either directly or in the form of a branch established in the host country.
  5. Guarantee and enhance transparency of the financial markets.
  6. Propose rules of conduct and more stringent and uniform market supervision.
  7. Include all investment firms.

MiFID review – October 2011

Following the MiFID review process 2010-2011, the EU Commission released two texts for approval by the EU Council and the EU Parliament: a regulation (MiFIR) and a directive (MiFID 2). The new Framework aims to make financial markets more efficient, resilient and transparent, and to strengthen the protection of investors.

The regulation addresses the aspects linked to the trading of orders. After introducing the concept of RM, MTF and SI (Regulated Market, Multilateral Trading Facilities and Systematic Internaliser), the regulation introduces the concept of OTF (Organised Trading Facilities) to cover places of negotiations that are not yet regulated (with an eye on dark pools of execution, crossing networks and some brokerage services).

The text aims to extend the rules regarding pre- and post-trade transparency from listed shares to all instruments (where feasible in terms of regulation). It also seeks to bring OTC derivatives on platforms to complement the EMIR (European Market Infrastructure Regulation).

Moreover, it aims to introduce, for shares, the US concept of Consolidated tape across the EU, where all prices quoted for a Share should be centralised. Finally, the reporting is extended to cover all instruments on all markets.

The Directive amends among others specific requirements regarding the provision of investment services, organisational and conduct of business requirements for investment firms and organisational requirements for trading venues.

Building on a comprehensive set of rules already in place, the revised MiFID sets stricter requirements for portfolio management, investment advice and the offer of complex financial products such as structured products.

MiFID in Luxembourg

In Luxembourg, MiFID was implemented in national law via the Law of 13 July 2007 on markets in financial instruments. In addition to transposing the directive, the law also introduced five new categories of Professionals of the Financial Sector (PFS). These new categories are financial intermediation companies, investment firms operating a Multilateral Trading Facility (MTF) in Luxembourg, Operators of a regulated market authorised in Luxembourg, Primary IT systems operators, Secondary IT systems and communication networks operators.

The ABBL helped prepare the Luxembourg banking industry for the introduction of MiFID via a number of working groups and the MiFID platform, consisting of MiFID experts and interested parties. Based on this work, the ABBL also published a MiFID handbook in 2007 for the benefit of its members, which proposed some non-legally binding guidelines for the Luxembourg banking industry.




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