The regulation of the Forex market is a question that never loses relevance. Day by day, more people prefer to showcase their potential in the stock market and earn a living through currency trading. Therefore, transparency of trading conditions, control over the fairness of broker operations by authorities and directives is essential. In European countries, the work of Forex brokers is regulated by MiFID.
European Directive MiFID
- Full name: EU Directive “On Markets in Financial Instruments”
- Name in English: An EU Directive “On markets in financial instruments”
- Short name: MiFID
- Subordinate countries: 27 member states of the European Union and 3 countries of the regional economic area
- Traders’ level of trust: high
- Official website: ec.europa.eu/finance/securities/isd
With the efforts of the UK’s Financial Services Authority (FSA), the EU Directive was created, aimed at controlling transactions within financial markets – MiFID. It replaced the previous ISD, which was directed at controlling investment operations.
The emergence of this regulator is another step by EU authorities towards creating a unified financial market in the region. The requirements set out in MiFID are mandatory for all member states of the union.
The objective of the directive is to apply new control rules aimed at achieving greater transparency in the financial reports of companies engaged in investment activities and similar organizations in operations with stocks and derivative contracts. The areas of application of the directive are as follows:
- increasing the range of investment services that require authorization;
- the possibility of conducting international operations by opening branches after obtaining the necessary documentation from their country;
- increasing the transparency of the trading process for securities: both before and after the transaction;
- controlling exchanges and markets that are not currently regulated.
Under the terms of the directive, investment companies must change their operational procedures: transaction reports, information archiving for five years. MiFID came into effect on 1.11.2007 and is now one of the main ones within the EU.
Traders’ trust in Forex brokers regulated by MiFID is quite high, as European quality in the world continues to be one of the best. It should be noted that MiFID is often replaced by local national regulators, such as CySEC in Cyprus.
FAQ
What is MiFID?
MiFID is an EU directive that regulates financial markets, ensuring transparency and fair practices for Forex brokers.
Why is MiFID important for traders?
MiFID ensures that Forex brokers operate transparently and fairly, increasing trader confidence in the market.
Which countries are covered by MiFID?
MiFID applies to 27 EU member states and three additional countries in the regional economic area.
