The regulatory impact of MiFID II and MIFIR on European capital markets : the process of “MiFIDisation” or over-regulation?

Abstract

MiFID was designed to liberalise the European Union’s capital markets and establish common investor protection standards across Europe to ensure that customers understand the risks and costs associated to the products and services they are buying or being recommended to buy. MiFID II and MiFIR, as shall be seen, are part of the post-financial crisis reforms, seeking to reduce systemic risk and strengthen financial stability of the EU’s capital markets. MiFID II will introduce the most noteworthy changes to the conduct of financial services and the market environment since the commencement of the EC’s FSAP. It will affect all categories of dealing, broking, asset management and advisory services undertaken by banks, non-banks and other service providers and also their corporate, institutional, professional and retail clients. Another significant area that is going to change with the implementation of MiFID II is the collection, collation and management of data to meet the new reporting requirements. Information technology systems will need to be upgraded to improve the precision, detail and availability of data. The implementation of MiFID II measures is not simply a compliance exercise, on the contrary, it is a huge undertaking. MiFID II and MiFIR contain considerable changes to investor protection, primarily with a view to improving disclosure and preventing conflicts of interest. Particularly, MiFID II aims to regulate investment service providers. There is also a significant breakthrough in market structure and transparency which comes about with the implementation of MiFID II and MiFIR.