This Practice Note explores the introduction of the investment research rules under the recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II), as specified in Commission Delegated Directive (EU) 2017/593 (the MiFID II Delegated Directive). It looks at the prohibition on inducements and the two exclusions available. It goes on to examine the investment research exclusion, including the requirements firms will need to abide by if they want to have clients pay for investment research. For more information about MiFID II, see Practice Note: EU MiFID II and MiFIR—essentials. Key points • MiFID II requires buy-side firms to pay for investment research separately from execution services. That is, the market practice of dealing commissions being used to pay for a bundled execution and research service is prohibited under MiFID II. • Buy-side firms must decide whether to pay for investment research themselves or pass the cost onto clients. • Where the cost is passed onto clients, a research payment account must be set up and a

This Practice Note summarises what MiFID business is as the term is defined in the Financial Conduct Authority (FCA) Glossary and provides a flowchart to work through the specific elements involved in determining whether the UK provisions derived from the Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II) apply. It also highlights the exemptions that may allow firms to fall outside the scope of MiFID II. Firms that fall within the scope of the UK provisions which implemented MiFID II must be authorised under Part 4A of the Financial Services and Markets Act 2000 (FSMA 2000) and comply with various organisational, conduct of business and other rules. This Practice Note also introduces the regime that applies to UK data reporting services. Although the UK has now withdrawn from the EU, the FCA continues to distinguish between MiFID business and non-MiFID business. For high-level information on the key elements of the UK MiFID II regime, with links to detailed guidance, see Practice Note: UK MiFID II—essentials. For information about the UK’s reforms of its MiFID II framework

Purpose of MiFID level 3 measures The Markets in Financial Instruments Directive (2004/39/EC) (MiFID) was adopted in 2004 as a level 1 or framework directive under the Lamfalussy process and had to be implemented into the national laws of European Union (EU) Member States by 1 November 2007 (although some Member States missed the implementation deadline). It replaced the Investment Services Directive (ISD), which was adopted in 1993. Its aim was to improve the competitiveness of EU financial markets by creating a single market for investment services and activities. Under the Lamfalussy process, level 1 refers to overarching framework legislation produced using the standard co-decision procedure. Level 2 refers to secondary legislation adopted by the European Commission in the form of delegated acts or implementing acts. For more information about the level 1 and level 2 measures under MIFID, see Practice Note: EU MiFID II and MiFIR—essentials. In order to ensure that MiFID was implemented across Member States in a coherent and uniform fashion, the European Securities and Markets Authority (ESMA) and its predecessor, the Committee

Regulation (EU) 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012

The European Securities and Markets Authority (ESMA) is consulting on transaction reporting and order book data under the Markets in Financial Instruments Regulation (MiFIR) Review. Responses are sought by 3 January 2025. After reviewing the feedback received, ESMA will publish a final report and submit the draft technical standards to the European Commission by the end of Q2 2025.

ARCHIVED: This Practice Note has been archived and will no longer be updated. Introduction to the MiFIR UK implementation roadmap The recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II) and Markets in Financial Instruments Regulation (Regulation (EU) 600/2014) (MiFIR) were published in the Official Journal of the European Union (EU) on 12 June 2014 and entered into force on 2 July 2014. MiFID II and MiFIR significantly amended and expanded the regulatory framework that was established by the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID I). As amended, the majority of the Directive and Regulation came into effect on 3 January 2018. EU Member States had until 3 July 2017 to transpose the provisions of MiFID II into national law, while MiFIR has direct effect in Member States. This document provides an article-by-article roadmap of MiFIR, with information on UK implementation for each article, including proposed and final changes to legislation and rules made by HM Treasury, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). 11pm

The European Commission has adopted technical standards under the Markets in Financial Instruments Regulation (MiFIR) (Regulation (EU) 600/2014) to establish consolidated tapes across EU financial markets. These tapes will centralise trading data—such as prices and volumes of shares, bonds, and derivatives—from execution venues across all Member States. The aim is to improve transparency, competition, and accessibility for both retail and institutional investors. The standards also set out criteria for authorising consolidated tape providers, define a revenue-sharing model between equity tape providers and trading venues, and require that market data be made available in a fair, transparent, and non-discriminatory manner. The package includes one implementing act and three delegated acts, which are now subject to scrutiny by the European Parliament and the Council.

The Financial Conduct Authority (FCA) has announced that Michael Nascimento has been sentenced to nearly four years additional imprisonment for failing to pay a confiscation order. In 2018 Nascimento was sentenced to 11 years for his role in a £2.8m investment fraud, where he was convicted with five associates of defrauding investors through a series of boiler room companies. At a City of London Magistrates’ Court hearing on 16 December 2022, he received an additional 1,417 days’ sentence.

The employee may, during their employment, be granted rights upon the terms and subject to the conditions of the rules from time to time of [name of option/equity scheme] or any other profit sharing, share incentive, share option, bonus or phantom option scheme operated by the Company or any other Group Company with respect to shares in the Company or any other Group Company (the Award). If on termination of the employee’s employment (whether by the employee or the Company and, in each case, whether lawfully, unlawfully or in breach of contract): • the employee loses any of the rights or benefits under such scheme[s],

What is a Micklefield clause? It is common for employee share plans to provide that, on termination of employment (or when an employee gives or receives notice of termination of employment), subsisting share awards will be forfeited and subsisting share options will lapse. It is also common for employee share plans (and sometimes also employment contracts) to contain clauses which effectively provide that the employee waives any claims they may have to compensation for the loss of such share awards on the termination of employment. Such clauses are known as ‘Micklefield clauses’ after the leading case on the effectiveness of such clauses, Micklefield v SAC Technology Limited. Often, such clauses are also drafted so as to try to exclude any claims that an employee might seek to bring for an alleged unlawful exercise of discretions by the company under the employee share plan. From the employer’s perspective, the purpose of such Micklefield clauses is to: • ensure that issues relating to the treatment of share incentives on termination of employment are, so far as possible,

Broadly, a micro-entity is a company which satisfies two or more of the following requirements: —it has a turnover of not more than £632,000 —it has a balance sheet total of not more than £316,000 (ie the aggregate of the assets as shown in the balance sheet), or —it has no more than 10 employees The classification originally derives from the Micro-entities Directive (2012/6/EU) which sought to introduce a less onerous accounting regime for the smallest of companies. It was implemented in the UK by the Small Companies (Micro-Entities' Accounts) Regulations 2013 (SI 2013/3008), which came into force on 1 December 2013 and introduced a new financial reporting regime for companies that qualify as micro-entities.

A micro cell is a low power station, often using unobtrusive antennas, designed to give coverage over a small localised area.