In the European Union (EU), one of the main reforms that will have a major impact on the financial services industry is the Markets in Financial Instruments Directive II (MiFID II). MiFID II is much more stringent than MiFID I and it has three specific areas that make it different from MiFID I:
- MiFID II introduces greater regulatory requirements to take account of developments in technology and market infrastructure within the financial services industry, such as the emergence of new trading platforms and the growth of high frequency and algorithmic trading.
- Following some notable failings during the financial crisis, MiFID II seeks to enhance investor protection.
- MiFID II has a goal of maximising transparency and reducing data fragmentation. Because of these three goals, MiFID II will have broader strategic, commercial and technological implications than MiFID I.
Currently, it is expected that MiFID II will be implemented around 2014/2015. The report outlines the strategic and commercial impacts for asset managers, retail banks and broker dealers, as well as the operational and technological impacts.