Since November 2007, MiFID (Markets in Financial Instruments Directive (2004/39/EC)) has been the cornerstone of financial market regulation in the EU. Launched and implemented by the European Securities and Markets Authority (ESMA), the framework aims to create a highly competitive single market for investment services and activities; and ensures the standardisation of investor protection norms across all financial assets.
- Overseeing the conduct of business requirements for financial and investment companies.
- Regulatory reporting by firms to prevent manipulation and market abuse.
- License requirements for regulated markets.
- Obligations toward trade transparency.
- Laws governing the admission of financial assets into trading activities.
On January 03, 2018, ESMA rolled out the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC and the Regulation on Markets in Financial Instruments, commonly referred to as MiFID II and MiFIR. The MiFID II was launched to ensure safer, fairer, and more efficient markets. It also increased the level of investor protection. This new legislative framework was adopted in Cyprus through the Cyprus Investment Services and Activities and Regulated Markets Law of 2017 (Law 87(I)/2017).
Fundamental Objectives of MiFID II
- To increase the amount of information available to investors and regulators through new reporting standards.
- Imposing specific limits on leveraged instrument trading on investment firms and trading venues.
- Introduction of new laws governing independent investment advice and product governance.
- Clear guidelines on the responsibility of the management bodies of firms, cross-selling, remuneration of staff, and more.
- Extensive requirements for reporting and information provided to clients by investment and broker firms.
- Restrictions on inducements paid to investment firms by any third-party provider of client services.