MiFID II

The Markets in Financial Instruments Directive II, or MiFID II, is one of the many new laws to come out of the 2008 financial crisis. As the name implies, MiFID II is the more updated version of the original MiFID legislation. MiFID OG was drawn up and passed quickly, in 2007, while MiFID II made some updates in 2018.

MiFID is a bunch of laws (reforms, one could say) for the financial industry within the European Union (EU). MiFID and MiFID II have done what they can to make investors feel like financial markets are more transparent, making costs more visible and requiring reports detailing price info, volume info, phone conversations (yeahhh), and more. If more red tape for markets leads to more confidence among investors, well, that’s something the EU is willing to do to patch things up.

MiFID OG addressed mostly stocks, while MiFID II added on rules for equities, commodities, derivatives, currencies, and other non-stock assets. MiFID II doesn’t only affect official exchanges, but also OTC trading, as well as targeting financial workers, from fund managers and bankers to firms. Besides requiring more reports, MiFID and MiFID II also put lots of caps on how much entities are allowed to trade, in an attempt to rein in any naughty-doing, like what happened to help cause the financial crisis.