After years of rule-drafting punctuated by industry complaints, the EU’s massive new financial regulation goes into force today. MiFID II affects markets in everything from shares to bonds to derivatives. It seeks to open up opaque markets by forcing brokers and asset managers to report prices publicly—for trading in liquid assets, in near-real time—and to report details of every trade to regulators, to avoid market abuse. For asset classes such as bonds, which are usually traded by phone, the changes are seismic: much trading will probably move to electronic exchanges. Another bit of the law requires investment banks to charge separately for research, with the aim of lowering costs for end investors. Yet today is likely to prove less disruptive than some initially feared. Regulators have granted last-minute delays on some aspects of the legislation, necessary not least because some EU countries have not yet integrated the rules into national laws.
MiFID II: Day zero