WHAT MiFID II Transaction Reporting and what does it do for us normal people on the street that know nothing about finances?
Ok so let us start at the beginning as in what does MiFID II stand for: The Markets in Financial Instruments Directive (“MiFID II”) and this, in turn, is also regulatedly related to another European legislature that monitors and reports any market abuse which is known as “MiFIR” (the Markets in Financial Instruments Regulation)
Seeing that we mentioned both MiFIR and MiFID, what is the difference between the two?
MiFIR is the set of rules we mentioned above which was created and still operates alongside the new MiFID II directive and these reports work hand in hand for an accurate and important way to control or prohibit abuse on the markets.
As MiFIR is passed as a self-regulatory directive as its main focus is on the rules and reporting on any executions that are required it is always referred to as a connection with MiFID II which goes to show the importance of the MiFID II Transaction Reporting.
Now we get to the main question?
What is MiFID II reporting?
The main and most important factor behind MiFID II reporting, as well as MiFIR, is the changes it created in the investment firms and trading venues ways of reporting of all transactions which not only gives them a better insight into trading behavior but also root out and detect any abuses that usually slips through the cracks by improving the process of detecting these abuses and insights.
In simple terms MiFID II that the European Union ( E U ) instituted as a legislative framework that regulates their financial markets and helps to protect the investors even as far as the bloc.
Since the crisis which happened in 2008, this system not only created a more secure and quality reporting system but also brought back confidence to the markets by investors from all walks of life as it standardized the market practices.
After a year of its implementation, MiFID II has proven it works even though many firms confirmed that this was and is a burdensome set of rules but are following it for the benefit of all and it shows with the new confidence in the EU markets.
The complicated and ” burdensome” factor is what makes this system work as it is a detailed system that predates the capital market unions and is the one big step towards the most important and unique factor, and that is AN INTEGRATED CAPITAL MARKET.