MiFID II Updates: Key Changes and Implications

1. Strengthened Trading Controls and Professional Client Assessment

Directive (EU) 2024/790 (MiFID II Review) introduces mandatory disclosures about the circumstances leading to trading halts or constraints, enhancing transparency in market disruptions as part of the requirements concerning Systems resilience, circuit breakers and electronic trading . A new provision allows investors to qualify as professional clients upon passing a test proving their understanding of transactions and associated risks. These changes aim to modernize trading practices while ensuring only knowledgeable clients access complex investment opportunities.

2. European Single Access Platform (ESAP) and Enhanced Market Reporting

Under Directive (EU) 2023/2864, the ESAP will centralize key market data, including information on trading obligations, issuer reporting, and administrative sanctions. Investment firms must now inform clients about where trades are executed and ensure comprehensive pre-trade and ongoing financial disclosures, such as audited annual reports. Member States are tasked with ensuring that regulatory information is accessible, while ESMA oversees detailed reporting frameworks, including manufacturer data and suspension criteria. This initiative improves transparency and harmonizes regulatory data sharing across the EU.

3. Retail Investor Protections and Cross-Border Services Oversight

The EU Commission’s Retail Investment Package emphasizes retail investor protection by requiring firms to assess transaction appropriateness and document client approvals for risk warnings. Independent advisors recommending well-diversified, non-complex and cost-efficient instruments to retail clients are exempted from collecting informations about the clients knowledge and experience about the considered financial instrument or service. Additionally, firms serving over 50 cross-border clients must report detailed service scopes to their home NCAs, while ESMA develops centralized reporting databases. Member States are encouraged to promote financial education and provide clear channels for reporting regulatory infringements.

Navigating these regulatory shifts can be complex, but LPA is your trusted partner, ensuring compliance and strategic adaptation to these evolving frameworks.