MiFID2 Definitions
MiFID 2 like many regulations uses lots of terms that have specific definitions, here’s a list of them with links to the official text plus a few comments.
| Term | Comment |
| Actionable Indication of Interest | |
| Aggressive Order | In R 2017/576. See also Order |
| Agricultural Commodity Derivatives | Article 1 of R 2013/1308 can be found here |
| Algorithmic Trading | See HFT here |
| Ancillary Services | Safekeeping, custody, loans relating to investment activities, general recommendations, underwriting, FX related to investment services. |
| Approved Publication Arrangement APA | Trade reports under MiFIR Articles 20 and 21 are here |
| Approved Reporting Mechanism ARM | |
| Asset Classes | The categories of financial instrument defined by MiFID2 in Section C of Annex I here |
| Average Effective Spread | In R 2017/575 |
| Average Speed of Execution for unmodified passive orders at best bid and offer | In R 2017/575 |
| Benchmark | |
| Book Depth | In R 2017/575 |
| branch | |
| Central Counterparty Clearing House CCP | The definition in EMIR |
| Central Securities Depository CSD | The definition in R 2014/909 |
| Certificates | |
| Client | See also Professional Client |
| Close Links | Article 22 of D 2013/34 can be found here |
| Commodity | In R 2017/565 |
| Commodity Derivatives | Point (44)(c) of Article 4(1) is here. Section C of Annex I is here. |
| Competent Authority | The national regulator(s). |
| Consolidated Tape Provider CTP | Trade reports under MiFIR Article 6 are here |
| Credit Institution | Article 4, Point 1.(1) of Regulation 2013/575 CRR |
| Cross-selling Practice | |
| Data Reporting Services | Links to; APA, CTP, ARM |
| Dealing on own account | |
| Delivery Type | In R 2017/575 |
| Depositary Receipts | |
| Derivatives | Only the products in points (4) to (10) are derivatives, i.e. “options futures ….or an MTF;” |
| Direct Electronic Access | |
| Directed Order | In R 2017/576. See also Order |
| Durable Medium | |
| Exchange Traded Derivative | |
| Exchange-traded Fund | |
| Execution of orders | See also Order |
| Failed Transaction | In R 2017/575 |
| Fill or Kill Order | In R 2017/575. See also Order |
| Financial Analyst | In R 2017/565 |
| Financial Instruments | |
| Give-in Transaction | In R 2017/587 |
| Give-up Transaction | In R 2017/587 |
| Group | Article 2 of D 2013/34 can be found here |
| Guarantee | In R 2017/579 |
| High-frequency Algorithmic Trading Technique | See Algorithmic trading here |
| Home Member State | |
| Host Member State | |
| Immediate or Cancel Order | In R 2017/575. See also Order |
| Interoperability Arrangement | From EMIR |
| Investment Firm | A firm carrying out the provision of investment services, (real person or legal person), must be authorised although authorised banks do not need separate authorisation |
| Investment services and activities | Includes the operation of an OTF or a MTF. |
| Large in Scale | In R 2017/575. Article 7 of MiFIR can be found here |
| Liquid Market | |
| Liquidity Fragmentation | |
| Management Body | |
| Market Maker | |
| Market Operator | |
| Matched Principal Trading | |
| Material Market in Terms of Liquidity | For shares and similar instruments it is defined in R 2017/587 here |
| Money market instrument | |
| Most Relevant Market in terms of Liquidity | In R 2017/587 |
| Multilateral System | |
| Multilateral Trading Facility, MTF | Trading venue aimed at less liquid financial instruments such as bonds. |
| Negotiated Transaction in shares, depositary receipts, ETFs, certificates and similar financial instruments | In R 2017/587 |
| Non-Financial Entity | This commodity position rule refers to; MiFID2 activities; Credit institutions and Investment firms; D 2013/36; Insurance D 1973/239; Reinsurance D 2005/68; Life Assurance D 2002/83; UCITS D 2009/65; Pension management D 2003/41; Alternative investment fund management D 2011/61; CCP; CSDs |
| Order | See also Directed Order, Fill or Kill Order, Aggressive Order, Passive Order, Immediate or Cancel Order |
| Organised Trading Facility, MTF | New class of trading venue catering for discretionary orders aimed at illiquid financial instruments such as OTC derivatives |
| OTC Derivative | Defined under EMIR, with reference to MiFID 1, Article 4 of D 2004/39 defining regulated markets can be found here |
| Other Months Contract | Commodity related |
| Outsourcing | In R 2017/565 |
| Package Transaction | In R 2017/583 |
| Parent Undertaking | Articles 2 and 22 of D 2013/34 can be found here |
| Passive Order | In R 2017/576. See also Order |
| Person with whom a Relevant Person has a family relationship | In R 2017/565 |
| Portfolio Compression | |
| Portfolio Management | |
| Portfolio Trade | In R 2017/587 |
| Price Multiplier | In R 2017/575 |
| Price Notation | In R 2017/575 |
| Professional Clients | As well as the defined list certain parties can request that they be treated as professional clients |
| Qualifying Holding | Articles 9 and 10 of D 2004/109 can be found here |
| Qualifying Money Market Fund | D 2009/65 may be found here here |
| Quantity Notation | In R 2017/575 |
| Regulated Market | Traditional equity stock markets and listed derivative exchanges. |
| Relevant Operator | Of a trading venue |
| Relevant Person | In R 2017/565 |
| Remuneration | In R 2017/565 |
| Request-for-quote System | In R 2017/583 |
| Retail Client | A Client who is not a professional client |
| Securities Financing Transaction More usefully; Securities Financing Transaction |
R 2017/587 refers to Article 3(6) of D 2017/577, however, this section does not exist, here’s a link to Article 3 which has only three sub parts. R 2017/565 refers to R 2015/2365 Article 3(11) (which is an update to EMIR). |
| Senior Management | |
| Size specific to the financial instrument | In R 2017/575. Article 11 of MiFIR can be found here |
| SME Growth Market | SMEs are a subset of MTFs |
| Sovereign Debt | |
| Sovereign Issuer | |
| Spot Month Contract | Commodity related |
| Structured Deposit | Article 2 of D 1014/49 can be found here |
| Structured Finance Products | |
| Subsidiary | Articles 2 and 22 of D 2013/34 can be found here |
| Systematic Internaliser | Executes client deals on its own account to execute client orders outside a regulated market or MTF and OTF and cannot be the operator of an MTF. |
| Third-country financial institution | MiFIR references; MiFID2 activities; Credit institutions and Investment firms; D 2013/36; Insurance and reinsurance D 2009/138; UCITS D 2009/65; Pension management D 2003/41; Alternative investment fund management D 2011/61 |
| Third-country Firm | |
| Tied Agent | |
| Trading Mode | In R 2017/575 |
| Trading Platform | In R 2017/575 |
| Trading System | In R 2017/575 |
| Trading Venue | Regulated market, MTF or OTF |
| Transaction | In R 2017/590 clarifying what activities are subject to the trade reporting rules. Article 26 of MiFIR can be found here. Also R 2017/566 clarifies partial execution’s status here |
| Transferable Securities | |
| Voice Trading System | In R 2017/583 |
| Volume | In R 2017/566 |
| Wholesale energy Products |