Online Trading


MiFID II/MiFIR applies from 3 January 2018. This new legislative framework will strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.

MiFID and Investor Protection

MiFID is the Markets in Financial Instruments Directive (2004/39/EC). It has been applicable across the European Union since November 2007. It is a cornerstone of the EU's regulation of financial markets seeking to improve their competitiveness by creating a single market for investment services and activities and to ensure a high degree of harmonised protection for investors in financial instruments.

MiFID was designed to set out:

  • conduct of business and organisational requirements for investment firms;

  • authorisation requirements for regulated markets;

  • regulatory reporting to avoid market abuse;

  • trade transparency obligation for shares; and

  • rules on the admission of financial instruments to trading.

On 20 October 2011, the European Commission adopted a legislative proposal for the revision of MiFID which took the form of a revised Directive and a new Regulation. After more than two years of debate, the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC and the Regulation on Markets in Financial Instruments, commonly referred to as MiFID II and MiFIR, were adopted by the European Parliament and the Council of the European Union. They were published in the EU Official Journal on 12 June 2014.

MiFID II scope consists of:

  • Ensuring fairer, safer and more efficient markets and facilitating greater transparency for all participants;

  • Increasing the amount of information available and reduce the use of dark pools and OTC trading through the new reporting requirements and tests;

  • Imposing a strict set of organisational requirements on investment firms and trading venues, and the provisions regulating the non-discriminatory access to central counterparties (CCPs), trading venues and benchmarks are designed to increase competition because of to the rules governing high-frequency-trading;

  • Enhancing investor protection e.g. through the introduction of new requirements on product governance and independent investment advice, the extension of existing rules to structured deposits and the improvement of requirements in several areas, including on the responsibility of management bodies, inducements, information and reporting to clients, cross-selling, remuneration of staff, and best execution.

Client Categorisation

In accordance with the Markets in Financial Instruments Directive (‘MiFID’), investment firms, like HMS LUX S.A. are required to categorise their clients on order to define the adequate level of investor protection and transparency. The MiFID categorise clients as “eligible counterparties”, “professional” clients and “retail” clients and acknowledges the clients’ rights to move between the three categories. The MiFID establishes the strongest level of investor protection for “retail clients” while it limits their level of risk exposure. In order to opt for a categorisation as “Professional”, the clients are required to have expertise and knowledge of the risks involved – particularly those linked to riskier products – and to satisfy certain quantitative criteria, both related to the clients’ portfolio and investments’ frequency.

Investor Protection

Protecting the interests of investors is one of the most relevant goals of the MiFID II. The new regime also provides for strengthened conduct rules such as an extended scope for appropriateness tests and reinforced information to clients. The legal requirements also consist on a new concept of “independent advice”, stricter product governance obligations for both product manufacturer and distributors and more restrictive regime for inducements with a ban for independent advisers and portfolio managers.


MiFID II/MIFIR increase transparency requirements for both investment firms and trading venues. They also introduce broad Pre-trade and Post-Trade transparency regimes in order to include non-equity instruments, while pre-trade transparency waivers will be available for large orders, requests for quotes and voice trading. Post-trade transparency is required for all financial instruments with the possibility of deferred publication or volume masking as appropriate.

Transaction Reporting

The obligation to report transactions under MiFIR requires investment firms that execute transactions in financial instruments to report “complete and accurate details of such transactions to the competent authority as quickly as possible and no later than the close of the following working day”. The aim of the transaction reporting is to promote the integrity of markets mandating national competent authorities (NCAs) and ESMA to enforce this integrity by monitoring investment firms’ activities as to their honest, fair and professional market behaviour. To this end, MiFID II/MiFIR introduces a revised and comprehensive reporting regime designed to enable authorities to apply their surveillance mandate efficiently.

Legal Entity Identification Codes (LEI)

The Legal Entity Identifier (LEI) is a 20-digit alpha-numeric code that enables clear and unique identification of legal entities participating in financial transactions. The LEI provides a unique identifier for all entities participating in financial transactions that can also be used on a cross-border basis, through a free and open database updated on a daily basis. This common framework is crucial to identifying clearly each exposure for risk management of financial transactions, to create transparency, and conduct market surveillance
LEIs, like other identifiers, are needed by firms to fulfill their reporting obligations under financial regulations and directives. According with legal requirements all legal entities must have a LEI in order for HMS to be able to execute a trade on their behalf. HMS can be found on the Global Legal Entity Identifier Foundations (GLEIF)

For more information in regards to MiFID II and MiFIR, please consult the following links:

Documents and Further Information


Directive 2014/65/EU on Markets in financial instruments (‘MiFID II’) requires investment firms who execute clients’ orders to summarise and make public on an annual basis, for each class of financial instruments the top five execution venues in terms of trading volumes where they executed those clients’ orders in the preceding year along with information on the quality of execution obtained.

For Further Information