What is MiFID?
MiFID stands for Markets in Financial Instruments Directive. It is a European Union law that provides harmonized regulation across the 31 states of the European Economic Area (EEA) for investment products, services and activities. Adopted in 2004 and implemented in 2007, it was the cornerstone of the European Commission’s Financial Services Plan.
What are the key aspects of MiFID?
MiFID has several key aspects:
- It provides authorization to firms, allowing them to provide services in the other member states.
- It requires firms to categorize clients by capability in order to assess their suitability for each type of investment.
- It requires that the firm captures information in order to ensure that client order handling is maintained appropriately.
- It requires firms to provide high levels of price transparency both pre and post execution of a trade.
- It has processes established in order to ensure that the client receives the best possible execution result for an order.