MiFIR II and MiFID III are upcoming regulatory frameworks in the EU (European Union) aimed at enhancing transparency, investor protection and market stability within the financial services sector.
MiFIR II
MiFIR II (Markets in Financial Instruments Regulation II) is an update to the original MiFIR, focusing primarily on transparency and trading across EU markets. MiFIR II aims to introduce more stringent requirements for transaction reporting, both pre- and post-trade transparency, and data accuracy. By expanding the scope of reportable instruments and increasing the level of detail required, MiFIR II seeks to provide regulators with a clearer, real-time view of market activities and potential risks.
MiFID III
MiFID III (Markets in Financial Instruments Directive III) is a forthcoming directive that builds on MiFID II, concentrating on investor protection, market stability and reducing the complexity of financial products for end-users. While MiFID II introduced rigorous standards around transparency, costs and disclosures, MiFID III aims to address identified gaps, particularly in relation to sustainability, cost structures and retail investor protection.
The need for MiFIR II and MiFID III stems from the EU’s commitment to mitigating risks in financial markets, a priority since the 2008 financial crisis and increasingly so as the impact of rapid digitalisation continues. With these new regulations, the EU is proactively addressing emerging challenges posed by complex derivatives and new digital financial products.
The timelines are still being finalised but MiFID III is expected to be proposed by the European Commission by the end of 2024, with MiFIR II likely seeing implementation around the same time. Full adoption will likely occur over the subsequent few years as member states integrate these regulations into national law.
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