The Markets in Financial Instruments Directive (MiFID) and the Markets in Financial Instruments Regulation (MiFIR) form the backbone of the European Union’s financial regulatory framework. Implemented in January 2018, these rules increase market transparency, strengthen investor protection, and enforce rigorous recordkeeping standards for all investment services.
MiFID II vs. MiFIR: What is the difference?
| Feature | MiFID II (Directive) | MiFIR (Regulation) |
| Legal Nature | Goals-based; must be transposed into national law. | Rules-based; directly applicable to all Member States. |
| Primary Focus | Organizational requirements and investor protection. | Transaction reporting and trade transparency, |
| Implementation | Allows for slight jurisdictional variations. | Standardized requirements across the entire EU. |
Who must comply with MiFID II?
Compliance is mandatory for any firm providing investment services within the EU, including:
- Investment firms and credit institutions (bankers)
- Trading venues and data reporting service providers
- Third-country firms: Non-EU firms performing investment activities for EU-based clients must also adhere to these standards
Recordkeeping requirements under MiFID II Article 16
Article 16 is the “gold standard” for regulatory archiving in Europe. It mandates that firms preserve records of all services, activities, and transactions.
Voice and electronic communications (Article 16(7))
Firms must record and archive all communications – including telephone conversations, email, chat, and mobile messaging – that relate to the reception, transmission, and execution of client orders. This includes “intent to trade” conversations, even if a transaction is never finalized.
The “Durable Medium” & WORM Requirement
Under Article 4(62), records must be stored in a durable medium that ensures:
- Unchanged Reproduction: Data cannot be altered or deleted (similar to the U.S. SEC WORM requirements)
- Accessibility: Records must be searchable and readily available to the client or competent authority upon request.
- Retention Period: Records must generally be kept for five to seven years, depending on the specific national jurisdiction.
MiFIR data reporting standards
A central pillar of MiFIR is the reporting of transaction data to the European Securities and Markets Authority (ESMA). These requirements aim to reduce market abuse by providing regulations with a clear “paper trail” of every trade executed across the EU.
Solve MiFID II compliance challenges with Smarsh
Meeting the technical demands of Article 16(7) requires more than just storage; it requires intelligent supervision. The Smarsh platform provides a defensible, AI-driven framework to manage EU regulatory risk.
- Capture every channel. Automatically archive 100+ channels, including mobile voice, WhatsApp, and Microsoft Teams, in their native, “durable medium” format.
- Detect more real risk with AI. Use machine learning and customizable risk scenarios to surface suitability concerns, reduce false positives and flag misconduct faster.
- Customize and test supervision models. Build and refine risk detection logic with no-code tools like Scenario Builder and Scenario Evaluator.
- Scale with confidence. Trusted by global financial firms, Smarsh helps you meet regulatory expectations while managing growing communication volumes.