Markets in Financial Instruments Regulation

The Markets in Financial Instruments Regulation (MiFIR) is a key piece of European Union legislation that, together with the Markets in Financial Instruments Directive II (MiFID II), governs the provision of investment services in the EU.

MiFIR specifically focuses on improving the transparency and oversight of financial markets, aiming to enhance investor protection, ensure fair trading practices, and increase market efficiency.

Key Aspects of MiFIR:

Transparency Requirements:

MiFIR imposes stringent pre- and post-trade transparency requirements on trading venues and investment firms, particularly in equity and non-equity markets. This means that information about trading prices and volumes must be made publicly available both before and after trades are executed.

Transaction Reporting:

Investment firms are required to report detailed information about their trades to regulatory authorities, which helps in monitoring market abuse and ensuring market integrity.
Trading Obligation:

MiFIR introduces a trading obligation for certain shares and derivatives, mandating that these instruments must be traded on regulated markets, multilateral trading facilities (MTFs), or organized trading facilities (OTFs).
Data Reporting Services:

The regulation establishes a framework for Approved Publication Arrangements (APAs), Consolidated Tape Providers (CTPs), and Approved Reporting Mechanisms (ARMs) to improve the quality and accessibility of trading data.

Cross-Border Operations:

MiFIR addresses the cross-border provision of services, allowing for more streamlined operations of financial services across EU member states while ensuring consistent regulatory standards.

Investor Protection:

While MiFID II is more focused on investor protection, MiFIR complements this by ensuring that trading activities are transparent and well-regulated, thus indirectly safeguarding investor interests.

MiFIR is part of a broader regulatory effort to create a safer, more transparent, and competitive financial market in the EU, particularly in the wake of the 2008 financial crisis. Its implementation is closely monitored by the European Securities and Markets Authority (ESMA).