Overview
The Markets in Financial Instruments Directive (MiFID) comes into force on November 1, 2007. Its main objective is to enhance the development of a pan-European market in investment services through the establishment of a single set of European regulatory rules. Amongst its impacts are changes in the way trades can be executed, the level of protection afforded to investors and pre and post trade transparency in equity markets.
The reasons behind the new regulations
European law makers wanted to transform the regulation of financial services as existing regulations were obstructing the development of a harmonised pan-European market –
a. Concentration rules and pre/post trade transparency in the Equity markets
Today, some countries have rules requiring firms to execute all share transactions on the domestic exchange or to report post trade information to the domestic exchange (these types of rules are known as “concentration rules”). MiFID prohibits such rules as they hamper access to markets in those countries and give a quasi-monopoly to the local exchange. MiFID has abolished concentration rules and established an alternative regime for pre and post trade transparency.
b. Differing standards of regulation across Europe
Firms that want to do business across Europe are often hampered by different regulations existing in each Member State. So MiFID has introduced a consistent set of high level regulatory principles, fleshed out by more detailed regulations, which apply across Europe. Member states can only add more regulation in exceptional circumstances.
c. Commodity Markets
Commodity related financial instruments have become an integral part of financial markets. However, regulation of this activity was inconsistent across Europe. As a consequence there were significant barriers to conducting this business across borders. MiFID brings commodity related financial services into mainstream financial regulation.
Order Execution Policy
MiFID requires that all firms review the quality of their executions in order to achieve the best possible result for their clients. Cantor Fitzgerald Europe is required to provide information to our clients about our order execution policy. If you have been classified by us as a professional client, you will have already been sent our policy. Any updates to this policy will be posted on this website. Please click on the link below to access the policy.
Click here for Order Execution Policy for Professional Clients of Cantor Fitzgerald Europe