MiFID
What is it?
MiFID stands for “Markets in Financial Instruments Directive.” It is a regulation of the European Union that sets requirements and standards for the provision of investment services and investor protection. MiFID aims to improve the efficiency and transparency of financial markets, while ensuring that investment services are delivered appropriately and in the best interest of investors.
MiFID governs a broad range of activities, including the trading of financial instruments, order execution, and portfolio management. The directive establishes clear rules regarding the information that must be provided to investors, ensuring they have access to relevant data about the products and associated risks.
Key aspects to consider
One of MiFID’s key features is that it promotes greater transparency in financial markets by requiring financial institutions to provide clear and understandable information about the products they offer. Additionally, the directive fosters competition in the sector, allowing investors to access a wider variety of financial products and services.
MiFID also focuses on investor protection by establishing measures to ensure that investment services are suitable for each client’s needs and risk profile. The directive requires financial service providers to assess the suitability of products before recommending them to clients, helping to prevent conflicts of interest and ensure that investors are not exposed to unnecessary risks.
MiFID was introduced to harmonize financial market rules within the EU, and it has been updated with MiFID II to address new challenges and technological advances in the financial sector.