Essential

MiFID

The EU regulation governing investment services and financial markets across member states, setting standards for broker transparency and client protection.

Definition

MiFID (Markets in Financial Instruments Directive) is the core EU regulation framework for investment services and financial markets. First implemented in 2007 and updated to MiFID II in 2018, it sets rules for broker transparency, best execution, client categorisation, and leverage limits for retail traders. MiFID II introduced significant restrictions on CFD trading in Europe, including leverage caps and negative balance protection requirements.

How It Works

Classifies clients as retail, professional, or eligible counterparty with different protections
Requires best execution: brokers must prove they got the best available price
Caps leverage for retail CFD traders (30:1 for major forex, 2:1 for crypto)
Mandates negative balance protection for retail clients

Trading Tips

If you trade with an EU-regulated broker, MiFID II leverage limits apply to your account

Professional client status unlocks higher leverage but removes some retail protections

MiFID-regulated brokers must disclose the percentage of retail accounts that lose money

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