The adoption of the Markets in Financial Instruments Directive (MiFID II), and accompanying Markets in Financial Instruments Regulation (MiFIR), signifies a comprehensive set of changes for European Financial Markets, giving rise to significant implications for firms’ strategies, business models, operations, conduct and governance which will require substantial implementation effort.


MiFID II follows on from its predecessor in 2007 and is likely to have just as big an impact – this time predominantly on the derivatives and fixed income markets – and have an evolutionary effect on transparency and trading. MiFID II is not an incremental change – its scale is vast with the EU institutions publishing over 5000 pages of text already.


Protiviti has the expertise and experience to help you. We have a senior team with MiFID and MiFID II regulatory and business change experience and knowledge, already assisting both buy and sell-side firms with implementation.


Key Areas of Impact and Implications

MiFID is a wide-ranging piece of legislation and, depending on your firm's business model, could affect a wide range of its functions, from client services to IT and Operations.


Here are some of the key areas of impact:


Investor Protection​

  • Best Execution: Increased obligations over a broader set of financial instruments requires additional information to be provided in relation to best execution arrangements and enhancements will be required to governance arrangements.
  • Conflicts of Interest: Instead of firms merely trying to manage identified conflicts and selling their own securities, there is now a stricter requirement on firms to prevent conflicts of interest from arising in the first place. 
  • Inducements: A further tightening of existing rules so there is now a complete ban on inducements being received in certain circumstances, and requirement for further client disclosure.
  • Product Governance: Firms will be expected to have explicit arrangements for product governance. These arrangements will apply to firms who manufacture or distribute products and they are designed to ensure that firms understand the nature of the products they are manufacturing and/or distributing and that they are sold to suitable clients. 
  • Reporting to Clients: Including greater disclosure requirements on costs and charges and confirmations.

Market Structure:

  • Trading venues: There is increased regulation of trading venues including the introduction of Organised Trading Facilities (OTFs), widening the scope of Systematic Internalisers (Sis).
  • Regulation of Commodity Derivatives: Change in the scope of commodity derivatives and broader scope of pre-trade and post-trade transparency rules.
  • Algorithmic and High Frequency Trading: There are additional requirements for due diligence and systems/controls on Algorithmic trading and specific provisions to ensure that high frequency trading (HFT) does not have an adverse effect on market quality or integrity.
  • Direct Electronic Access (DEA): Firms providing DEA have new notification requirements to regulators and are fully responsible for the compliance of their clients with the requirements of MiFID II and the rules of the trading venue.
  • Transparency: The transparency regime from MiFID I has been extended to non-equity instruments, with some exceptions, where trading interest and transactions conducted on trading venues will need to be made publicly available.
  • Transaction Reporting: The revised legislation broadens the number of financial instruments within scope for reporting to regulators which will require additional information to be included in transaction reports.


The severity of impact, scope, complexity and effort required will vary according to segment. Sell-side and investment banks are expected to be impacted by conduct of business changes as well as changes relating to markets, venues and trading. Buy-side firms, such as wealth managers and investment managers are expected to be more affected by changes to conduct of business and much less so by changes relating to markets, venues and trading. Significant exceptions may be those buy-side firms that are engaged in algorithmic trading or high frequency trading.  


How Protiviti can help

We tailor our approach to supporting our clients’ MiFID II Programmes by offering a range of services that support delivering a successful implementation programme that can reduce programme execution risk. We have experience in helping our clients both navigate the regulatory requirements and then deliver the business change necessary to implement those requirements.


We have helped our clients with issues including:

  • Transaction Reporting, Client Reporting Transparency and Best Execution
  • Distribution, Product and related governance changes
  • Programme design, implementation and co-ordination
  • Data and IT changes required to underpin MiFID