MiFID, MiFID II, MiFIR, and PSD2 are European Union regulations that play significant roles in the financial and payment services sectors. Here's a brief overview of each:
MiFID(Markets in Financial Instruments Directive)
MiFID was introduced in 2004 and aimed to create a single European market for investment services and activities. It established a framework for regulating investment firms, financial markets, and the provision of investment services.
The primary goals of MiFID were to enhance competition, improve investor protection, and harmonize financial markets across the EU.
MiFIDII(Markets in Financial Instruments Directive II)
MiFID II is an updated version of MiFID that came into effect in January 2018. It introduced a range of significant reforms and expanded the scope of regulation.
Key changes introduced by MiFID II include stricter rules on transparency, the trading of financial instruments (including non-equity instruments), algorithmic trading, and the provision of investment research.
MiFID II also established new reporting requirements and increased investor protection measures.
MiFIR (Markets in Financial Instruments Regulation)
MiFIR is closely related to MiFID II and works in tandem with it. It is a regulation that complements the MiFID II directive. MiFIR provides detailed rules and regulations for the operation of financial markets and the trading of financial instruments.
MiFIR covers topics such as transaction reporting, transparency requirements for trading venues, and the obligations of systematic internalizers (entities that execute client orders off-exchange).
PSD2 (Revised Payment Services Directive)
PSD2 is a European Union directive that regulates payment services and payment service providers. It came into effect in January 2018.
PSD2 aims to enhance competition, security, and innovation in the payments industry. It introduced new requirements, such as strong customer authentication (SCA) for online payments and access to account (XS2A) provisions, allowing third-party providers to access customer account data with their consent.
PSD2 also expanded the scope of regulation to include new types of payment service providers, such as payment initiation service providers (PISPs) and account information service providers (AISPs).
These regulations are complex and have far-reaching implications for financial institutions, investment firms, payment service providers, and other entities operating in the financial and payment services sectors in the EU. Compliance with these regulations is crucial, as non-compliance can result in regulatory fines and other penalties. It’s essential for affected organizations to stay informed about updates and changes to these regulations and work closely with regulatory authorities to ensure compliance.
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