The Council of the European Union has adopted changes to the EU’s trading rules concerning the Markets in Financial Instruments Regulation (MiFIR) and the Markets in Financial Instruments Directive (MiFID) which together regulate investment services and financial markets activities in the EU. The aim of the new rules is to empower investors, in particular by making consolidated market data easily available at EU level.
On 25 November 2021 the Commission presented a review of MiFIR and MiFID II, which together regulate investment services and financial markets activities in the EU. The aim of the review was to increase transparency on capital markets, improve competitiveness and ensure a level playing field.
Currently, trading data is scattered across multiple platforms, such as stock exchanges and investment banks, making it difficult for investors to access the accurate and up-to-date information they need to take decisions.
The rules adopted yesterday establish EU-level ‘consolidated tapes’, or centralised data feeds for different kinds of assets, bringing together market data provided by platforms on which financial instruments are traded in the EU. The consolidated tapes will aim to publish the information as close as possible to real time.
As a result, investors should have access to up-to-date transaction information for the whole of the EU, making it easier for both professional and retail investors to access key information such as the price of instruments and the volume and time of transactions.
The new rules also impose a general ban on ‘payment for order flow’ (PFOF), a practice through which brokers receive payments for forwarding client orders to certain trading platforms. Member states where the practice of PFOF already existed may allow investment firms under its jurisdiction to be exempt from the ban, provided that PFOF is only provided to clients in that member state. However, this practice must be phased out by 30 June 2026.
This adoption is the final step of the procedure, with texts now published in the EU’s Official Journal and entering into force 20 days later. The regulation will apply immediately in all EU countries, whereas the member states will have 18 months to bring into force the laws, regulations and administrative provisions necessary to comply with the directive.
