Securities markets

MiFID/MiFIR

The Markets in Financial Instruments legislation (split into the MiFID Directive and the MiFIR Regulation) covers both business conduct and organisational requirements for investment firms, as well as authorisation requirements for public markets and rules on the admission of financial instruments to trading. The MiFID/MiFIR framework was revised in 2014 (MiFID 2/MiFIR) and current rules entered into force in January 2018. Importantly, capital requirements and remuneration rules for MiFID investment firms are detailed in the Investment Firms Regulation/Directive and not in the MiFID/MiFIR framework. While a targeted Covid "quick-fix" was concluded by end 2020, a partial review of the MiFID framework is expected shortly.

How does it affect private equity?

MiFID rules apply directly to Invest Europe members who operate under a MiFID license, such as advisers/arrangers or AIFMs with a so-called MiFID "top-up". 

Although the majority of private equity managers are not MiFID entities, the MiFID framework also has implications for the whole private equity industry, given its wide scope and the extent to which other pieces of legislation – including the AIFMD – cross-reference its provisions. From that perspective, the issues of greatest interest to Invest Europe have been the definition of a professional client, the rules on inducements and, to a lesser extent, the MiFID third country equivalence provisions.