The aim of MiFID II is to repair the shortcomings of MiFID I and to improve the functioning of financial markets and investor protection. MiFID I was revised because it became partially outdated due to major changes on the capital markets. The evaluation of MiFID I showed that there were a number of shortcomings, for example, in the field of transparency, supervision of OTC (over-the-counter) trade and technological developments, such as High Frequency Trading (HFT). In addition, MiFID I lacked rules for markets that had thus far been barely regulated, such as the trade in derivatives and structured products.
MiFID II - Why is MiFID I being revised?
The revision of MiFID I and the introduction of the Markets in Financial Instruments Regulation (MiFIR) are referred to jointly as MiFID II. The MiFIR is directly applicable and has binding legal force, because it is a regulation. Therefore it does not have to be transposed into national laws, like in in the Netherlands in the Wft [the Dutch Financial Supervision Act]. For the MiFID this is different: it is not directly applicable and has no binding legal force, because it is a directive. Therefore needs to be transposed into national laws.