MiFIR and MiFID II review: A further ten key things that EU financial institutions should know

Introduction

In February 2024 we published a briefing note, MiFIR and MiFID II review: ten key things that EU financial institutions should know, which summarized the key features of the draft legislation that was generally known as the ‘MiFID II / MiFIR review’ and was designed to update both the Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR). 

At the time of writing the briefing note the draft legislation was almost at the end of its legislative journey having been formally adopted in a plenary vote in the European Parliament. In this latest briefing note we provide an update on what finally happened to the draft legislation and also consider the position regarding the all-important Level 2 measures.

1. Level 1 measures finalised

The draft legislation amending MiFID II and MiFIR were published in the Official Journal of the EU (OJ) on March 8, 2024. The full titles of the amending legislation are:

• Regulation (EU) 2024/791 amending the Markets in Financial Instruments Regulation (600/2014) as regards enhancing data transparency, removing obstacles to the emergence of consolidated tapes, optimising the trading obligations, and prohibiting receiving payment for order flow (MiFIR II).
• Directive (EU) (2024/790) amending Directive 2014/65/EU on markets in financial instruments (MiFID III).

The amending legislation entered into force on March 28, 2024. Being a Regulation MiFIR II was directly applicable in Member States. As for MiFID III, Member States had until 29 September 2025 to bring into force the laws, regulations, and administrative provisions necessary to comply with the Directive.

2. Interpretative notices

Unfortunately, when MiFID III and MiFIR II came into force not all the Level 2 measures were in place. Of course, MiFIR II being a regulation had direct effect in the Member States 20 days after publication in the OJ. In response to queries raised by market participants the European Securities and Markets Authority (ESMA) issued a statement setting out practical guidance supporting the transition to the revised regime. The European Commission (Commission) also issued a draft interpretative notice¹. 

The Commission’s Notice acknowledged that several provisions in MiFIR II had to be supplemented by Commission delegated regulations which needed to become fully operational. As such, the Commission felt it necessary to clarify the interpretation and implementation of the transitional provision laid down in Article 54(3) of MiFIR as amended by Article 1(47)(b) of MiFIR II².

The key point in the Commission’s Notice was a distinction between those changes that did not require a delegated act (so-called self-executing measures) and those that did. The Commission Notice stated:

"The Commission Notice clarifies that, pursuant to Article 54(3) MiFIR, the existing Commission delegated regulations, as applicable before 28 March 2024, continue to apply, together with the provisions that they supplement, in all cases where the MiFIR provisions are to be supplemented by new or amended Commission delegated regulations to become fully operational and cannot be supplemented adequately by the existing Commission delegated regulations only."

This essentially meant that the self-executing measures came into effect on March 28, 2025 but the other measures that were dependent on Level 2 measures come into force on a date when the relevant delegated acts have been finalised.

ESMA’s statement covered a number of different issues: the volume cap (single / double)³, equity transparency, non-equity transparency, the systematic internaliser (SI) regime, designated publishing entities (DPEs) and reporting. 

3. What Level 2 measures are still outstanding?

At the time of writing several Level 2 measures were still outstanding. The table set out at the end of this briefing note provides an overview of the position. And, unfortunately, there will be even further delays to some of these.

On October 6, 2025, the Commission announced that it would not be adopting certain Level 2 measures until after October 1, 2027. The Level 2 measures were set out in an annex to a letter that the Commission sent to the European Supervisory Authorities. The Commission said that it was taking this action in order to deliver EU policies more effectively and efficiently, as outlined in its Communication on Implementation and Simplification.

Many of the outstanding MiFID III and MiFIR II Level 2 measures were covered in the annex including:

• Regulatory technical standards (RTS) on the review of Commission Delegated Regulation 2022/1299 on position management controls for commodity derivatives.
• RTS 22 - Transaction reporting.
• Revised RTS specifying trading obligation for derivatives (DTO).
• RTS 23 - Reference data reporting. 
• RTS 24 – Order Record Keeping. 
• Revised delegated act amending Delegated Regulation 2017/565 on position reporting.
• Revised delegated act amending Delegated Regulation 2017/565 on order execution policy, reasonable commercial basis.

4. Recent ESMA statement on transition period

ESMA issued a further statement on October 10, 2025 making two important points on the transition period. First, ESMA only made one general comment referring to  the aforementioned changes in the timing for the adoption of delegated and implementing acts by the Commission , market participants are expected to comply with MiFID III / MiFIR II provisions as amended by the MiFID II/MiFIR review, unless otherwise specified. Second, it states that as a general rule, the revised MiFID II provisions apply only when the relevant changes are transposed into Member State national law.

ESMA’s statement also provided certain guidance. For instance: 

• ESMA expects trading venues to take into account the position management controls in relation to derivatives of emission allowances (EUAs) included in the amending draft RTS that ESMA submitted to the Commission in December 2024 until the current RTS is revised. This is remarkable as the Commission has deliberately considered that it will not adopt this draft RTS for now and put it on the list. It is not clear how ESMA would be able to enforce compliance with the draft RTS, this does not seem to be within its power. However, perhaps ESMA is already considering itself the relevant competent authority, now Commissioner Alberqueque recently announced it intends to attribute ESMA with more supervisory powers in relation to certain market infrastructure.
• In December 2024, ESMA submitted an amendment to Implementing Technical Standard (ITS) 4 to the Commission to implement the changes to Article 58 of MiFID. The relevant documentation containing technical specifications to be used for reporting purposes by trading venues were published by ESMA on September 25, 2025. ESMA will communicate separately on the test phase for reporting as per the new requirements. The planned go live of the amended reporting and register is scheduled for April 1, 2026. As per the amended Level 1 text, investment firms are no longer required to report positions in EUAs under Annex II of ITS 4.

5. Transparency

One of the main priorities of the MiFIR review was to enhance and improve pre- and post-trade transparency in non-equity markets. The review sought to strengthen the information available to stakeholders by improving, simplifying and further harmonizing transparency in capital markets. In order to do so, the MiFIR review introduced a new non-equity transparency regime which was intended to be simpler and more effective than its predecessor. 

To this end the MiFIR II introduced two new articles, Article 8a for pre-trade transparency and Article 11a for post-trade deferrals, that effectively separated the non-equity regime into two – one for bonds, structured finance products (SFPs) and EUAs under the amended Articles 8 and 11; and another one for over-the-counter (OTC) derivatives, with the new Articles 8a and 11a.

ESMA was to further specify the obligations under the overall pre- and post-trade transparency regimes. The draft RTSs related to pre-trade transparency, in particular the definition of trading systems and pre-trade transparency waivers under Article 9 of MiFIR (as amended), and post-trade transparency, in particular deferrals under Articles 11 and 11a of MiFIR (as amended), for bonds, SFPs and EUAs, and derivatives, respectively. These empowerments are, however, under different legislative timelines:

• For the post-trade transparency for bonds, SFPs and EUAs under Article 11(4) of MiFIR (as amended) the deadline is nine months after entry into force.
• For pre-trade transparency (covering all non-equity instruments) under Article 9(5) of MiFIR (as amended) the deadline is 12 months after entry into force.
• For post trade transparency for derivatives under Article 11a(3) of MiFIR (as amended) the deadline is 18 months after entry into force.

Following an earlier consultation, ESMA published a final report addressing the transparency mandate for bonds, SFPs and EUAs in December 2024. The Commission then adopted a Delegated Regulation amending the RTS laid down in Delegated Regulations (EU) 2017/583 (RTS 2) and (EU) 2017/587 (RTS 1) as regards transparency requirements for trading venues and investment firms in respect of bonds, SFPs, EUAs, and equity instruments.

On November 3, 2025, there was published in the OJ Commission Delegated Regulation (EU) 2025/1246). This amends the RTS laid down in RTS 2 and RTS 1 as regards transparency requirements for trading venues and investment firms in respect of bonds, SFPs, EUAs, and equity instruments. This Delegated Regulation enters into force on the twentieth day following that of its publication in the OJ (November 23, 2025). Article 1, Article 2, point (2), points (3)(a) and (c), point (5), point (10)(a), and point (13) shall apply from March 2, 2026.

The second ESMA statement referred to in section 4 of this briefing note referred to the amending Delegated Regulation noting that most of the revised transparency requirements apply from March 2, 2026. However, as regards RTS 1, 20 days after the amending Commission Delegated Regulation has been published in the OJ, two key provisions start applying: 

• Article 13 – give-up and give in transactions will be excluded from the post-trade transparency reporting when executed off-venue.
• Articles 11a and 11b – SIs will have to comply with new quoting obligations.

In this regard, ESMA referred to its announcement of October 8, 2025 on the standard market size for liquid instruments on the basis of the amended Table 3 and the new Table 3a of Annex II of RTS 1. These values will determine the new quoting obligation for SIs according to Articles 11a and 11b of RTS

1. While these amendments are still to be published in the OJ they are not on the Commission’s list of delayed measures, ESMA invites market participants to anticipate the application of the MiFIR provisions related to the transparency requirements for these instruments as of March 2, 2026.

As for the transparency mandate for derivatives under Articles 8a and 11a of MiFIR (as amended by MiFIR II) ESMA issued on April 3, 2025, a consultation paper, MiFIR Review Consultation Package 4: On transparency for derivatives, package orders and input/output data for the derivatives consolidated tape. This consultation included ESMA’s proposals setting out detailed parameters for both pre‑ and post‑trade transparency. For example, it included proposals regarding the determination of which derivatives are liquid vs. illiquid (class-level criteria, trading activity metrics, frequency of reviews), and the consequences for transparency obligations. It also covered pre‑trade transparency waivers, the conditions and scope for waiving publication of quotes and order book data (e.g., for illiquid instruments and large-in-scale (LIS) orders), including how to treat request for quote and voice markets. For post‑trade transparency ESMA covered deferrals and masking. Other transparency topics included publication standards and flags and interaction with trading protocols. In addition to these topics ESMA considered the treatment of packaged orders and input/output data for the derivatives consolidated tape.

The consultation closed on July 3, 2025. Nothing so far has been published on the next steps. However, a delegated act amending the scope of OTC derivatives subject to transparency requirements per the mandate under Article 8a MiFIR (as amended by MiFIR II) is referred to in the annex of those Level 2 measures being delayed. However, a delegated act under Article 11a of MiFIR (as amended by MiFIR II) dealing with the post trade deferral regime for trading venues in respect of derivatives is not covered.

6. Consolidated tape

On 3 November 2025, there was published in the OJ, several technical standards⁴ enabling the creation of the consolidated tape: 

• Commission Delegated Regulation supplementing MiFIR (as amended by MiFIR II) with regard to RTS on the authorisation and organisational requirements for approved publication arrangements (APAs) and approved reporting mechanisms (ARMs), and on the authorisation requirements for consolidated tape providers (CTPs) and repealing Delegated Regulation (EU) 2017/571. 

The Commission Delegated Regulation is designed to achieve two objectives. To specify the information that APAs and ARMs are required to provide to ESMA, or, where in short it relates to an APA which will not provide its services on a cross border basis, the NCA to evidence that they meet all the conditions for authorisation as well as specify the information to be notified according to Article 27f(2) MiFIR (as amended by MiFIR II) on the members of their management body and their suitability. It also specifies the organisational requirements that apply to APAs and ARMs, the information that CTPs are required to provide to ESMA to evidence that they meet all the conditions for authorisation as well as the information to be notified according to Article 27f(2) MiFIR (as amended by MiFIR II) on the members of their management body and their suitability.

This Delegated Regulation enters into force on the twentieth day following that of its publication in the OJ (November 23, 2025).

• Commission Implementing Regulation laying down ITS for the application of MiFIR (as amended by MiFIR II) with regard to the standard forms, templates and procedures for the authorisation of APAs, ARMs and CTPs, and related notifications, and repealing Commission Implementing Regulation (EU) 2017/1110.

The Commission Implementing Regulation ensures that all provisions setting out standard forms, templates and procedures for the authorisation of data reporting services providers and related notifications are contained in one Regulation.

This Delegated Regulation enters into force on the twentieth day following that of its publication in the OJ (November 23, 2025).

• Commission Delegated Regulation supplementing MiFIR (as amended by MiFIR II) with regard to RTS on the obligation to make market data available to the public on a reasonable commercial basis (RCB).

Article 13 of MiFIR (as amended by MiFIR II) requires market operators and investment firms operating a trading venue, APAs, CTPs and SIs, to make pre-trade and post-trade information on transactions in financial instruments available to the public on a RCB and to ensure non-discriminatory access to that information. The draft RTS specify, among other things, what constitutes unbiased and fair contractual terms and non-discriminatory access to pre-trade and post-trade market data.

• This Delegated Regulation enters into force on the twentieth day following that of its publication in the OJ (November 23, 2025). For market operators and investment firms operating a trading venue, approved publication arrangements and SIs which are authorised before November 23, 2025, this Delegated Regulation shall apply from August 23, 2026.

• Commission Delegated Regulation 2025/1155 supplementing MiFIR (as amended by MiFIR II) with regard to RTS specifying the input and output data of consolidated tapes, the synchronisation of business clocks and the revenue redistribution by the CTP for shares and exchange traded funds and repealing Delegated Regulation (EU) 2017/574.

The Delegated Regulation specifies technical details relating to consolidated tape input and output data, the synchronisation of business clocks and revenue redistribution by the CTP for shares and exchange traded funds. It does this in a number of ways including by setting out minimum standards for transmission protocols to ensure efficient, secure, and high-quality transmission of data from data contributors to CTPs. 

This Delegated Regulation enters into force on the twentieth day following that of its publication in the OJ (November 23, 2025). Articles 11 to 16 shall apply from March 2, 2026. Delegated Regulation (EU) 2017/574 is repealed with effect from March 2, 2026.

7. DPEs and SIs

Under MiFIR a number of banks have opted in as an SI, as a result they could report transactions for their clients so their client did not have to report. MiFIR II introduced DPEs as a new category of reporting entity. Investment firms are able to obtain DPE status for specific classes of financial instrument. Investment firms with DPE status are responsible for making a transaction public through an APA without the need to opt into SI status.

Investment firms can apply to their national supervisory authorities for DPE status in accordance with Article 21a(1) of MiFIR (as amended by MiFIR II). DPEs must submit certain reference data for OTC derivatives to ESMA, this is regulated in Article 27(1) subparagraph 3 MiFIR (as amended by MiFIR II). A valid Legal Entity Identifier Code is required for entry in the ESMA register.

Previously, ESMA issued a public statement in July 2024 to guide investment firms in the transition to the new DPE regime. The DPE regime became fully operational on February 3, 2025. ESMA maintains a public register of DPEs by class of financial instruments, this is intended to help market participants identify those entities. At the time of writing there were over 500 DPEs on ESMA’s register.

As for the SI regime, on January 24, 2025, ESMA published a new web page on SIs stating that from September 29, 2025 it would be no longer necessary for it to perform SI calculations. At the same time ESMA added that it was discontinuing immediately the voluntary publication of quarterly SI calculations data on the basis that it would reduce the administrative burden on investment firms. As such the mandatory SI regime ended on February 1, 2025 although investment firms could continue to opt into the SI regime on a voluntary basis.

ESMA’s second statement referred to in section 4 above noted that with the DPE regime, the mandatory SI regime based on a quantitative test is no longer applicable, and investment firms are relieved from performing that test. When notifying information to their respective Member State competent authorities, those investment firms meeting the qualitative requirements for equity instruments or opting into the regime are invited to base such notification on the template in the draft ITS on the content and format of the SI notification, pending adoption by the Commission and publication in the OJ.

8. Best execution

The requirement under the best execution obligation to annually publish a list of the top five most used execution venues has been deleted by MiFID III. The information was deemed not to be too useful/insightful and hopefully CTPs will be a useful replacement. To ensure that investment firms take all sufficient steps to obtain the best possible result when executing their clients’ orders (while accounting for inter alia price, costs, speed of execution), Article 27 of MiFID II (as amended by MiFID III) sets out requirements for firms concerning best execution. This includes the obligation for firms to describe their processes to achieve best execution, so called “order execution policies”.

Following an earlier consultation on April 10, 2025, ESMA published a final report on the draft RTS specifying the criteria for establishing and assessing the effectiveness of investment firms’ order execution policies. The draft RTS included requirements on:

• The establishment of an investment firm’s order execution policy; this includes the classification of financial instruments in which firms execute client orders and the selection of venues for the order execution policy.
• The investment firm’s procedures and criteria to monitor and regularly assess the effectiveness of its order execution arrangements and order execution policy.
• The investment firm’s execution of client orders through own account dealing.
• An investment firm should deal with specific client instructions.

When commenting on the feedback received to its consultation ESMA made a number of interesting points including:

• ESMA observed that the possible use of one venue for client order execution was an existing market practice adopted by some investment firms regardless of its QAs in which it states that investment firms should consider multiple execution venues. ESMA, in contrast to its consultation proposal, addressed this issue more specifically in the draft RTS’ requirements for the initial selection of execution venues for the order execution policy. An investment firm selecting only one venue to execute client orders (for a given class of financial instruments or all client orders) is obliged to set out in its order execution policy how this selected single venue ensures obtaining the best possible result for clients. The draft RTS also requires an investment firm to control in its assessment of the effectiveness of the order execution policy whether the chosen single execution venue obtains consistently the best possible result for clients.
• To clarify the requirements for firms executing client orders by dealing on own account, ESMA made certain amendments to the draft RTS it consulted on. For example, in response to stakeholders’ comments, ESMA amended the requirement for a firm to set out in its execution policy how it ensures the fairness of the price when executing client orders in OTC products.
• ESMA clarified that whilst the draft RTS set out requirements for the internal order execution policy and processes it does not set out provisions for disclosures to clients. In contrast, Article 66 of Commission Delegated Regulation (EU) 2017/565 sets out what information on the order execution policy investment firms shall provide to clients, and ESMA does not intend to suggest any change to Article 66 as a result of the draft RTS.

The Commission had three months in order to decide whether to adopt the draft RTS. Nothing further was heard on the draft RTS until October when they were among those Level 2 measures listed by the Commission as being delayed.

9. Payment for order flow

The ban on payment for order flow (PFOF) is set out directly in the Level 1 text of MiFIR II. Article 39a of MIFIR (as amended by MiFIR II) prohibits investment firms from receiving any fee, commission, or non-monetary benefit from third parties for routing client orders to particular trading venues or execution venues. While there are Level 2 acts under MiFID III/MiFIR II that address inducements, conflicts of interest, and best execution, none are specifically dedicated to PFOF. The prohibition is considered sufficiently clear and self-executing in the Level 1 text. It does not introduce new concepts or mechanisms that would require further elaboration; it simply extends the existing regulatory approach by adding a clear-cut prohibition. 

There remains Article 39a(2) of MiFIR (as amended by MiFIR II), where a Member State may exempt investment firms under its jurisdiction from the ban on receiving PFOF. However, this exemption has not been widely taken up, Germany continues to be the only Member State utilising the exemption.

10. What has the UK been doing in the meantime?

The United Kingdom (UK) has not copied the MiFID II/MiFIR review. Since Brexit, the UK has run its own Wholesale Markets Review (WMR) and broader Edinburgh/Smarter Regulatory Framework reforms. Both regimes move in a similar direction on several themes (for example market structure simplification, consolidated tape(s), transparency recalibration etc) but they differ in design choices, timing, and calibration. In practice, firms active in both the EU and UK need to treat them as distinct frameworks.

In terms of notable developments, The Financial Services and Markets Act 2023 delivered the outcomes of the WMR where there was clear support for the proposals and where changes were most urgently needed, for example removing the double volume cap and share trading obligation which were thought to restrict trading unnecessarily.

The Financial Conduct Authority (FCA) published a Policy Statement setting out a framework for a UK bond consolidated tape in December 2023. More recently, on September 24, 2025, the FCA published a brief but consequential update stating that it had received a legal challenge to its decision awarding the contract for the CTP. As a result, the FCA cannot enter into the contract with the successful bidder as quickly as planned. As for an equities consolidated tape framework, the FCA is committed to publishing a consultation paper by the end of 2025.

In November 2024, the FCA published Policy Statement 24/14 which introduces new bond and derivative transparency rules for trading venues from December 1, 2025. The regulator also included in chapter 9 of the Policy Statement a short section for discussion on the future of the SI regime. Thereafter on July 4, 2025, the FCA issued Consultation Paper 25/20: Consultation Paper on the SI regime for bonds and derivatives including Discussion Paper on equity markets (CP25/20).

In CP25/20 the FCA proposed three main changes:

• Removal of the SI regime for bonds and derivatives, as well as SFPs and EUAs.
• Removing the prohibition on an investment firm to execute clients’ trades on a multilateral trading facility they operate on a matched principal trading basis.
• Permitting trading venues operating under the reference price waiver to use a broader set of prices than just the primary market, or the most relevant market in terms of liquidity, to cross orders under their systems; this would also include allowing the use of the reference price waiver within the same system where the price is derived from.

The deadline for comments on CP25/20 was September 10, 2025.

The FCA intends to finalise the changes on the SI regime for bonds and derivatives and the other reforms in a Policy Statement in Q4 2025. The FCA will use the responses to the discussion questions on reforms to equity transparency to inform the proposals that it intends to consult on in 2026.

And finally, earlier this year the FCA published a Policy Statement, PS25/1, on reforming the commodity derivatives regulatory framework. The FCA published its proposals in an earlier Consultation Paper, CP23/27, which covered the key pillars of the commodity derivatives regulatory regime, i.e. position limits, exemptions from those limits, position management controls, the position reporting regime and the ancillary activities test. The rules in PS25/1 will come into force on July 6, 2026 although rules enabling trading venues to receive and process applications for exemptions from position limits commenced on March 3, 2025.

Annex: MiFID III / MiFIR 2 Level 2 measures