The Markets in Financial Instruments Directive (MiFID) is the 2004/39/EU Directive of the EU which sets out a new institutional framework of operation for markets in financial instruments.
It is implemented in the single market of the European Economic Area (EEA), that is, in the 28 member states of the EU along with Iceland, Norway and Liechtenstein. In Greek Law, this Directive has been incorporated with L.3606/2007, and it took effect on the 1st of November 2007.
The European Union reassessed and revised the framework of MiFID I and in 2014 published the Directive 2014/65/ΕΕ (MiFID II), and the Regulation (EU) 600/2014 (MiFIR), broadening the scope of the initial Directive.
The new framework of MiFID II aims, among other things, at greater transparency and protection of the investors as well as more effective market operation.
MiFID IΙ Directive was incorporated into the Greek legislation on January 2018 with Law 4514/2018.
More specifically, the MiFID/MiFID II framework sets out the way in which:
- an agency or provider of investment services is to be organised and monitored.
- transactions are to be held between investment firms and customers in financial markets.
- investment services are to be provided to customers.
MiFID/MiFID II provisions change the way providers of investment services are organised, thus making transactions easier and promoting harmonisation of investment markets in Europe.
The most important change it brings about, however, is that it secures greater transparency and protection for investors, mainly those who do not have the necessary knowledge and experience. For example, MiFID/MiFID II provisions have an immediate positive impact on investors, as they provide for:
- categorising investors according to their investment knowledge and experience
- achieving the optimal result for the investor in the execution of his/her orders
- evaluating the suitability and appropriateness of investment transactions, so that each investor can be presented with the investment solution that is really suitable for them, and so that they do not undertake greater risk than they would be willing to
- notifying the investor about commissions and possible inducements
- notifying the investor about the Conflict of Interest Policy of the company providing him/her with investment services
MiFID/MiFID II framework shall apply to investment firms, market operators, data reporting services providers, and third-country firms providing investment services or performing investment activities through the establishment of a branch in the Union.