MiFID II is the cornerstone of EU financial regulation. Its breadth and scope are broad, with requirements applying to a diverse range of entities active in financial markets – from trading venues to investment firms and asset managers.

The European Union Markets in Financial Instruments Directive II (MiFID II) lays down fundamental organisational and market transparency requirements in the interest of promoting robust, transparent and efficient financial markets. It also contains provisions governing the terms of trade and relations with clients, with chapters dedicated to investor protection and product governance.

Accordingly, MiFID II establishes how financial advisers and asset managers interact with clients – which involves determining the latter’s investment preferences and risk tolerance. MiFID II was amended in 2022 so as to ensure that client sustainability preferences are taken into account during the investment process.