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The Markets in Financial Instruments Directive (referred to as "MiFID") is European Union legislation that provides harmonised regulation for investment services for the 31 member states of the European Economic Area. It was intended to increase the integration and efficiency of EU financial markets by establishing a harmonised regulatory framework for the provision of investment services in financial instruments across the EU and for the operation of regulated markets by market operators.
MiFID came into force on 1 November 2007, replacing and expanding upon the Investment Services Directive. Following the global financial crisis of 2008, the European Commission reviewed MiFID and on 20 October 2011 published proposals for a revised Directive (MiFID II) and a new Regulation (MiFIR).
MiFID II is wide-ranging legislation which can affect a wide range of functions including trading, transaction reporting and client services to IT and HR systems. It is the cornerstone of the European Commission's Financial Services Action Plan, whose 42 measures will significantly change how EU financial service markets operate. It is designed to accelerate the adoption of legislation based on a four-level approach recommended by the Committee of Wise Men chaired by Baron Alexandre Lamfalussy. MiFID retained the principles of the EU "passport" introduced by the Investment Services Directive (ISD) and introduced the concept of "maximum harmonization" which places more emphasis on home state supervision. This is a change from the prior EU financial service legislation which featured a "minimum harmonization and mutual recognition" concept. "Maximum harmonisation" does not allow states to be "super equivalent" or to "gold-plate" EU requirements detrimental to a "level playing field".
In April 2014, the European Parliament approved both MiFID II, an updated version of the original MiFID law, and MiFID II's accompanying regulation, MiFIR. The directive and regulation include fewer exemptions and expand the scope of the original MiFID to cover a larger group of companies and financial products. Both MiFID II and MiFIR are scheduled to take effect from January 2018.