FCA Update: MIFID II

The changes to the Markets in Financial Instruments Directive (MiFID) came into play on 3 January 2018. They provide an update on the EU Legislation introduced in 2007.

Following the 2008 financial crisis, the European Commission set out to update MiFID to:

strengthen investor protection
  • reduce the risks of a disorderly market;
  • reduce systemic risks; and
  • increase the efficiency of financial markets.
What are the changes?

The changes mainly address two areas, Conduct of Business (COB) rules and operations of markets.

COB rules

As a result, these have been updated to help provide additional protection to consumers from inappropriate products or services. This especially relates to ensuring that firms check their prices quoted to clients so that they are fair. This can be done via market research and comparing to similar products where possible. ‘Sufficient’ steps should be taken to ensure this has taken place before execution takes place. This will likely lead to strengthening front office accountability and internal controls in place.

Operations of markets changes

They have been refreshed following on from the recent developments in the technology and market infrastructures. Further changes have been made in relation to those companies dealing with commodity derivatives. Position limits and daily/weekly reporting will be required.

For more information

For more information on our FCA audit service, please contact either:
Jonathan Vickery or Alex Ormerod, or call us on:

01483 416232