MiFID III Updates & Changes - AI-supported Regulatory Adaptation for Securities Service Providers

MiFID III (Directive 2024/790/EU) amends the existing MiFID II Directive and must be transposed into national law by EU member states by 29 September 2025. MiFIR II (Regulation 2024/791/EU) amends the MiFIR Regulation and applies directly in all EU member states from 28 March 2025. Together they form the MiFID/MiFIR review package under the EU Capital Markets Union.

The consolidated tape provider (CTP) is a central data service that aggregates pre- and post-trade data from all EU trading venues, systematic internalisers and designated publishing entities into a single, continuous data stream. ESMA runs separate selection procedures for the CTP covering equities, ETFs, bonds and OTC derivatives. The bond CTP selection process was initiated in 2025. The aim is greater transparency and fair competition on execution quality.

Payment for order flow (PFOF) will be fully banned in the EU from 30 June 2026. The transition period applies to member states that currently permit PFOF – this particularly affects neobrokers in markets like Germany. Investment firms must adjust their order routing models and inducement structures by that date.

MiFIR II significantly strengthens pre- and post-trade transparency. For equities, the deferral regime is simplified and the volume threshold for dark trading (double volume cap) is revised. For bonds, a new tiered post-trade transparency regime with four deferral levels is introduced. Additionally, all trading venues and systematic internalisers must deliver their data in standardised quality to the consolidated tape provider.

Designated publishing entities (DPE) are a new publication mechanism in the revised MiFIR. Investment firms executing OTC transactions can designate a DPE to publish their post-trade data. DPEs partially replace the former approved publication arrangements (APA) and are required to make the data available to the consolidated tape provider as well.

The MiFID III / MiFIR II reform is a central building block of the EU Capital Markets Union. It aims to make the European capital market more competitive, transparent and better integrated. Specifically, an EU-wide consolidated tape should improve access to market data, the PFOF ban should strengthen investor protection, and the new transparency rules should make price formation in markets more efficient.

Implementation follows several stages: MiFIR II changes apply directly from 28 March 2025. The MiFID III Directive must be transposed into national law by 29 September 2025, with national provisions applying from 29 September 2026. The PFOF ban has a transition period until 30 June 2026. ESMA is working in parallel on regulatory technical standards (RTS) and guidelines that specify the details of the new requirements.