Brussels,

Investment services and regulated markets

The European Union (EU) has implemented a comprehensive set of rules for investment services and activities aimed at promoting fair, transparent, efficient, and integrated financial markets. These regulations are designed to enhance the competitiveness of financial markets by creating a single market for investment services and activities while ensuring high levels of investor protection.

Key Regulations

  1. Markets in Financial Instruments Directive (MiFID): Introduced in April 2004 and in force until January 2018, MiFID aimed to create competition between services and provide more choices and lower prices for investors. However, shortcomings were revealed following the 2008 financial crisis.
  2. Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR): Implemented from January 2018, these frameworks introduced more robust measures to address market deficiencies, enhance transparency, and strengthen investor protection. Key provisions include mandatory trading of derivatives on organized venues and improved disclosure requirements.

Recent Developments

  • ​Capital Markets Union: The EU continues to develop the Capital Markets Union (CMU) to improve capital movement across member states. Recent legislative efforts include the Listing Act, aimed at simplifying company listings, and other measures to enhance market infrastructure and insolvency processes​ (KPMG)​​ (European Commission)​.
  • MiFIR Review: The EU has been reviewing MiFIR to address emerging trading platforms and activities. Recent political agreements have focused on enhancing data transparency, removing obstacles to consolidated tapes, and optimizing trading obligations​..

Policy Making Timeline

  • 29 June 2023: Political agreement on MiFIR review between the European Parliament and the Council.
  • 1 February 2024: Political agreement on the Listing Act as part of the clearing, insolvency, and listing package.
  • 27 March 2024: Draft interpretative notice on the transitional provision of the MiFIR review.

Future Directions

The EU continues to refine its financial market regulations to better protect investors and adapt to new trading technologies. This includes ongoing consultations and revisions to the MiFID II and MiFIR frameworks, as well as efforts to integrate sustainability factors into financial market regulations​.