MiFID II and MiFIR in 2026: The Complete Guide
A 2026 deep dive into MiFID II and MiFIR - investor protection, best execution, the MiFIR Review, consolidated tape, PFOF ban, Listing Act, and how MiFID intersects with MiCA for crypto assets.
What MiFID II and MiFIR really are in 2026
MiFID II (Directive 2014/65/EU) and MiFIR (Regulation 600/2014) are the backbone of EU investment services law. MiFID II is transposed into national law and governs authorisation, conduct and organisational requirements for investment firms. MiFIR applies directly across the EU and covers trading transparency, transaction reporting and third-country access. Together they shape every order routed to an EU trading venue and every piece of advice a European adviser gives a retail investor.
The 2026 version of the regime is different from the 2018 launch. The MiFIR Review (Regulation 2024/791 and Directive 2024/790) entered into force in March 2024 and is phasing in through 2025 and 2026. It brings a consolidated tape for equities, bonds and derivatives, an EU-wide ban on payment for order flow, a reformed volume cap for dark trading, and tightened pre- and post-trade transparency for non-equity instruments.
Investor protection
Suitability, appropriateness, target market, product governance, costs and charges disclosure.
Market structure
Regulated markets, MTFs, OTFs, systematic internalisers, trading obligation and the new consolidated tape.
Transparency and reporting
Pre and post-trade publication, RTS 22 transaction reports to national regulators, record keeping for five years.
Whether you run a broker-dealer in Frankfurt, a wealth manager in Madrid or a Paris-based PSI, MiFID II is the rulebook that decides what you can sell, how you must sell it, and what you owe the customer when something goes wrong.
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Request demoInvestor protection in practice
Investor protection is where MiFID II has the sharpest teeth. Three blocks matter most in day-to-day work: suitability, best execution and target market.
Suitability and appropriateness
For advice and portfolio management, the firm must check knowledge, experience, financial situation, loss tolerance and sustainability preferences. For execution-only on complex products, an appropriateness test applies.
Best execution
Orders must be executed on terms most favourable to the client, considering price, cost, speed, likelihood of execution and settlement. The MiFIR Review replaced the RTS 27 and 28 reports with a sharper obligation focused on actual outcomes.
Target market and product governance
Manufacturers define a target market for every product, distributors check it against actual clients, and negative target markets flag who must not be sold the product.
Add to this the costs and charges disclosure (ex-ante and ex-post, showing the cumulative effect on returns), the inducements regime (strict limits on third-party payments, with an EU-wide PFOF ban from 2026), and the conflict of interest rules. These are where most supervisory fines still land: ESMA, BaFin, CNMV and AMF enforcement reports consistently flag weak suitability files and opaque cost reporting.
The MiFIR Review 2024: what actually changes
The MiFIR Review is the biggest update to EU market structure since the 2018 launch. Five changes shape the 2026 working landscape.
| Change | What it does | Live from |
|---|---|---|
| Consolidated tape | A single EU-wide data feed for equities, ETFs, bonds and OTC derivatives. ESMA runs the tender; first providers selected in 2025, live feeds across 2025 - 2026. | 2025 - 2026 |
| PFOF ban | Payment for order flow is banned across the EU. Member states with existing PFOF had a transitional period that ends on 30 June 2026. | 30 June 2026 |
| Volume cap reform | The old double volume cap is replaced by a single 7% cap on dark trading under the reference price waiver and the negotiated trade waiver. | 2025 |
| Non-equity transparency | Pre and post-trade transparency reshaped for bonds and derivatives with new deferral regimes, more granular size-specific to the instrument thresholds. | 2025 - 2026 |
| Systematic internaliser regime | Quantitative thresholds removed for non-equities. Firms opt in. The SI quoting obligation for equities is refined. | 2024 onward |
The practical impact: retail brokers that relied on PFOF revenue (mostly neobrokers in Germany) have had to rebuild their monetisation around spreads, subscriptions and interest on cash. Market data vendors face a new competitor in the consolidated tape. Buy-side firms get cheaper, more comparable post-trade data.
The Listing Act and retail access
The Listing Act (Regulation 2024/2809 and related amendments) entered into force in December 2024 as a package to make EU capital markets more attractive for issuers, especially SMEs. It amends the Prospectus Regulation, the Market Abuse Regulation and MiFID II itself.
Simplified prospectus
A single, shorter EU growth prospectus for SMEs, standardised templates, and higher thresholds before a full prospectus is required.
Research unbundling eased
The 2018 unbundling of research from execution is relaxed for small and mid-cap coverage. Investment firms can again pay for research on a bundled basis under conditions.
Multiple voting shares
A harmonised framework lets SME Growth Market issuers use multiple voting share structures while keeping minority investor protections.
Retail investment strategy
The Retail Investment Strategy package, still under trilogue in 2026, aims to simplify disclosures, cap inducements further and introduce value-for-money benchmarks on retail products.
For an investment firm, the Listing Act is mainly about lighter documentation and easier cross-border coverage of EU issuers. It is not a rewrite of MiFID II, but it smooths several friction points that the 2014 text created.
Authorisation across EU jurisdictions
A MiFID licence is granted by a national competent authority, then passported across the EU and EEA. The rules are harmonised, the vocabulary is not. Here is how three key markets frame the same authorisation.
| Jurisdiction | Legal label | Regulator | Typical timeline |
|---|---|---|---|
| Germany | Wertpapierinstitut under the WpIG (Investment Firm Act, 2021) | BaFin (with Bundesbank on prudential matters) | 9 - 12 months |
| Spain | Empresa de Servicios de Inversion (ESI): SV, AV or EAF | CNMV (with Banco de Espana on prudential matters) | 9 - 12 months |
| France | Prestataire de Services d'Investissement (PSI): entreprise d'investissement or SGP | AMF and ACPR (joint authorisation) | 9 - 15 months |
The authorisation file is similar across the three: programme of operations, governance and fit and proper checks on senior managers, three-year business plan, capital and liquidity projections, ICT and outsourcing policies, AML framework, and the full conduct-of-business setup (suitability, best execution, conflict of interest, complaints handling). Expect a pre-application meeting, a formal filing, two or three rounds of questions, and a supervisory college for cross-border operations.
Capital requirements under IFR and IFD
Since June 2021, MiFID investment firms are prudentially supervised under the Investment Firms Regulation (IFR, 2019/2033) and the Investment Firms Directive (IFD, 2019/2034), not the bank regime. Firms are split into three classes.
| Activity | Initial capital | Typical fit |
|---|---|---|
| Reception and transmission of orders, advice, portfolio management (no client money, no dealing on own account) | EUR 75,000 | Small advisers, EAF (ES), robo-advisers |
| Execution of orders, portfolio management with client money | EUR 150,000 | Brokers, wealth managers holding client assets |
| Dealing on own account, underwriting, operating an MTF or OTF | EUR 750,000 | Market makers, trading venues, full-service investment firms |
On top of the initial capital, Class 2 and Class 3 firms must hold the higher of their K-factor requirement, one quarter of fixed overheads, and the permanent minimum capital. IFD also adds remuneration rules, governance expectations and a group prudential test.
MiFID vs MiCA: where one ends and the other starts
The EU Markets in Crypto-Assets Regulation (MiCA, Regulation 2023/1114) fully applies from 30 December 2024. It regulates crypto-assets that are not already financial instruments under MiFID II. The practical boundary is sharp, but the edge cases are where lawyers spend their billable hours.
| Asset type | Regime | Who authorises |
|---|---|---|
| Security tokens | MiFID II and the Prospectus Regulation. Treated as any other transferable security. | National competent authority (BaFin, CNMV, AMF) |
| E-money tokens (EMTs) | MiCA Title III. Must be issued by an authorised credit institution or EMI. | MiCA authorisation under national CASP regime |
| Asset-referenced tokens (ARTs) | MiCA Title IV. Reserve requirements, redemption rights, governance and own funds rules. | MiCA authorisation |
| Other crypto-assets (utility, pure payment coins) | MiCA Title II (whitepaper) and Title V (CASP services: custody, exchange, execution, advice, portfolio management). | CASP authorisation |
| Crypto derivatives | MiFID II and MiFIR (transparency, trading obligation, EMIR for clearing). | Investment firm licence |
A firm that wants to cover both worlds usually pairs a MiFID investment firm licence with a CASP authorisation under MiCA. Several MiFID firms (BaFin-regulated Wertpapierinstitute in particular) have bolted a CASP permission onto an existing licence to offer spot crypto alongside traditional instruments without fragmenting the customer experience.
Compliance operating model for 2026
A realistic MiFID II compliance stack in 2026 has seven moving parts. Miss any of them and supervisors notice on their next thematic review.
- Client onboarding and classification. Retail vs professional vs eligible counterparty. Opt-up and opt-down procedures documented. AML and sanctions screening integrated.
- Suitability and appropriateness engine. Questionnaire, scoring, periodic refresh, sustainability preferences, annual suitability report for advice and portfolio management.
- Target market and product governance. Product approval committee, positive and negative target market, distribution channel review, regular product review.
- Best execution and order routing. Execution policy, venue selection, SI and market maker rules, outcome-based monitoring after the MiFIR Review replaced RTS 27 and RTS 28.
- Transaction reporting (RTS 22). T+1 reports to the national regulator with up to 65 fields per trade. Instrument reference data (FIRDS) must match. Reconciliation is non-negotiable.
- Record keeping. Five years (seven in some member states) for all client communications including electronic channels, phone and chat. The telephone recording obligation has caught more firms than any other operational rule.
- ICT resilience and outsourcing. DORA applies from 17 January 2025 and layers onto MiFID II. Registers of outsourcing arrangements, ICT risk management, incident reporting within hours.
The firms that keep supervisors happy are the ones that treat the stack as a single connected system, not seven spreadsheets. That is exactly what modern compliance tooling is for.
How Crassula helps investment firms ship faster
MiFID II is not a product, it is a set of obligations. But most of those obligations live or die in software: onboarding, suitability, costs and charges, transaction reporting, record keeping, client reporting. That is where Crassula comes in.
Client onboarding
KYC, KYB, PEP and sanctions screening, MiFID classification, suitability questionnaire and sustainability preferences in one flow.
Core ledger
Multi-currency accounts and custody ledger for cash and instruments, with IBAN provisioning and SEPA Instant rails.
Reporting engine
Client statements, costs and charges disclosures, annual suitability reports and RTS 22 feeds into an ARM.
Admin back office
Case management, audit trail, record keeping across channels, role-based access and supervisory queries.
Whether you are a BaFin-licensed Wertpapierinstitut, a Spanish ESI authorised by the CNMV, an AMF-supervised PSI or a cross-border wealth platform, the stack plugs into your existing licence or one of our partners. Talk to us if you want to see a target operating model and a MiFID II launch roadmap mapped to your timeline.
FAQ
MiFID II is a directive, transposed into national law (WpIG in Germany, the Ley del Mercado de Valores in Spain, the Code monetaire et financier in France). It covers authorisation, conduct and organisation. MiFIR is a regulation, directly applicable across the EU, covering transparency, transaction reporting and third-country access. You always need to read them together.
Five big items: an EU-wide consolidated tape for equities, bonds and derivatives; a ban on payment for order flow with a transition ending 30 June 2026; replacement of the double volume cap with a single 7% cap on dark trading; redesigned pre and post-trade transparency for non-equities; and a reworked systematic internaliser regime. The review entered into force in March 2024 and phases in through 2025 and 2026.
Germany: BaFin authorises Wertpapierinstitute under the WpIG, with the Bundesbank involved in prudential supervision. Spain: the CNMV authorises empresas de servicios de inversion (SV, AV, EAF). France: the AMF and ACPR jointly authorise PSIs. All three cooperate through ESMA and apply the same MiFID II and MiFIR rulebook.
MiFID II applies to security tokens and crypto derivatives. MiCA (fully applicable from 30 December 2024) covers everything that is a crypto-asset but not a financial instrument: e-money tokens, asset-referenced tokens and other crypto-assets, plus CASP services (custody, exchange, execution, advice). A firm offering both worlds typically holds a MiFID investment firm licence and a MiCA CASP authorisation.
Under IFR and IFD (in force since June 2021), initial capital starts at EUR 75,000 for advisers and RTO firms, EUR 150,000 for firms executing orders or holding client assets, and EUR 750,000 for firms dealing on own account or running a trading venue. On top of that, Class 2 firms must hold the higher of K-factor requirements, one quarter of fixed overheads, and the permanent minimum.
Realistically 9 to 15 months from serious pre-application work to licence in hand. BaFin, CNMV and AMF all target a formal 6 month statutory review once the file is complete, but preparing the file (governance, policies, business plan, IT and outsourcing, AML, conduct of business) is where the calendar is really spent.
No. The MiFIR Review bans PFOF EU-wide. Member states that allowed it (Germany being the most material) had a transitional period that ends on 30 June 2026. Neobrokers with PFOF-heavy business models have been rebuilding revenue around spreads, subscriptions and interest income during this window.
Crassula ships the modules investment firms need to operationalise MiFID II: onboarding with classification and suitability, a core ledger for cash and instruments, reporting for clients and regulators (including RTS 22 feeds), and an admin back office with record keeping and audit trail. You plug it into your own licence or a partner, and ship a branded investment product in weeks rather than years.
