The Markets in Financial Instruments Directive (MiFID) is a European Union legislation – introduced in 2004 with Directive 2004/39/EC, replaced later by Directive 2014/65/EU (commonly known as MiFID 2) which came into force in 2018 – that requires investment firms and banks operating in the EEA¹ financial markets to:

• Provide a high degree of transparency in the investment services offered to facilitate fair competition by ensuring a set of common standards and rules.
• Protect investors by categorising customers depending on their financial situation as well as on their experience and knowledge in the investment field.

MiFID also sets out other requirements, such as standardising the regulatory disclosures and reporting to the relevant authorities.

In terms of financial instruments covered by MiFID, the initial list (see letter C of Annex I of Directive 2004/39, which included amongst others: transferable securities; money-market instruments; options, futures, swaps, forward rate agreements having certain characteristics) has been expanded by MiFID 2 to include certain Over The Counter (OTC) derivatives.

¹ The European Economic Area (EEA) consists of not only the EU member states (i.e., Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, the Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden) but also Iceland, Liechtenstein, Norway, and United Kingdom.