Overview of the MiFID II/MiFIR Review
The review is a core component of the EU’s Capital Markets Union and introduces reforms to strengthen transparency, investor safeguards, and market efficiency. Key features now in effect include:
- Consolidated Tape (CT): ESMA is in the process of appointing consolidated tape providers for bonds and equities/ETFs, with the first services expected in 2026. This system is designed to centralize trade data across EU markets and lower data fragmentation.
- Designated Publishing Entity (DPE) Regime: Investment firms can now assume responsibility for publishing OTC trades without SI registration, with ESMA maintaining a public DPE register.
- Best Execution Reporting Simplification: RTS 27/28 reports have been abolished, with execution quality information expected to flow via the consolidated tape instead.
- Ban on Payment for Order Flow (PFOF): PFOF is prohibited for retail and elective professional order flow. Some jurisdictions allowed transitional use until mid-2026, but most brokers have already terminated such arrangements.
- Pre- and Post-Trade Transparency Reform: Dark trading is capped under a new single volume cap. OTC derivatives and equity Systematic Internalizers (SIs) face broader disclosure duties, while post-trade transparency now extends further into the OTC space.
- Commodity Derivatives: Position limits are narrowed to critical contracts only, easing burdens for less significant markets.
Together, these reforms create a tighter rulebook that reshapes how CFD brokers execute, report, and market their products.
Impact on CFD Brokers And New Compliance Reality
1. Investor Protection and Marketing
CFD brokers are now bound by a full inducement ban for retail clients. PFOF arrangements must have been dismantled, and execution policies must demonstrate client-first routing. Supervisors are expected to closely examine whether brokers are aligning with the intent of the rules, eliminating conflicts, not just disclosing them.
Regulators have already issued warnings against offshore relocations or incentivizing professional client status as workarounds. Brokers found promoting these practices post-deadline are at risk of enforcement actions.
2. Leverage and Suitability
Leverage caps, already entrenched across the EU since 2018, remain a supervisory priority. Some regulators are going further: for example, in 2025 the Cyprus Securities and Exchange Commission introduced stricter 10:1 leverage caps on non-major commodity and exotic index CFDs
Firms are expected to ensure suitability and appropriateness tests are applied rigorously, with supervisors likely to review client files for evidence that inappropriate clients were screened out.
3. Transparency and Reporting
CFD brokers internalizing trades must now comply with expanded post-trade transparency obligations, reporting certain OTC CFD transactions that reference venue-traded instruments through Approved Publication Arrangements (APAs). While pre-trade obligations for non-equity SIs were lifted, brokers acting as SIs in equities must prepare to publish quotes above the regulatory threshold once Level 2 standards are applied.
On the transaction reporting side, brokers are required to follow updated schemas (RTS 22), with additional instruments now in scope. National regulators have already begun checking for accuracy and completeness in reporting.
4. Product Governance
The product governance regime is fully operational, and supervisors are demanding evidence that CFDs are designed and distributed only to suitable target markets. Brokers must demonstrate that product reviews are ongoing and that risk disclosures, negative balance protection, and margin close-out rules are working as intended.
With the deadline passed, brokers should now focus on demonstrating compliance in practice and preparing for supervisory inspections.
What Are The Key Challenges Post-Deadline And Priorities Now
- Supervisory Scrutiny: Regulators are expected to initiate thematic reviews and inspections in late 2025 and 2026. CFD brokers that failed to update policies, reporting systems, or marketing materials are at risk of fines. Such intentions were announced by, among others, the German BaFin and the Cypriot CySEC.
- Data Accuracy: Early indications suggest transaction reporting quality remains uneven, with NCAs flagging errors in OTC trade reporting.
- Client Communications: Firms that reduced leverage or removed certain products have faced client pushback, requiring careful communication strategies.
At this stage, your CFD brokerage should already have:
- Eliminated PFOF and updated order execution and conflicts of interest policies.
- Established APA connections for trade reporting and tested transparency workflows.
- Revised marketing and client onboarding practices to avoid inducements and misclassification.
- Conducted product governance reviews and documented target market justifications.
- Trained staff on the new obligations and rationale.
Firms still catching up must treat remediation as urgent. Supervisors are unlikely to accept “work in progress” explanations this far past the deadline.
10 Compliance Strategies for Your CFD Brokers (Post-Deadline)
Now that the MiFID II/MiFIR review is in force, CFD brokers must shift from preparation to sustained compliance and remediation. Practical strategies include:
- Post-Deadline Audit
- Conduct a thorough review of execution policies, reporting, and client categorization.
- Address any gaps quickly and document corrective measures.
- Stronger Governance
- Elevate MiFID II/MiFIR compliance to board level.
- Record management decisions on leverage, inducements, and client treatment.
- Tighter Reporting Controls
- Automate APA reporting and reconciliation.
- Test systems regularly to avoid omissions or late publications.
- Clear Client Communication
- Update onboarding materials and disclosures to reflect new rules.
- Explain why leverage, inducements, or features have changed.
- Robust Product Governance
- Reassess CFDs quarterly against client outcomes.
- Narrow target markets or adapt product features if harm persists.
- EU-Wide Consistency
- Where national regulators impose stricter standards, adopt them across all EU operations.
- This prevents fragmentation and supervisory conflicts.
- Inspection Preparedness
- Keep detailed evidence of changes: updated policies, staff training, reporting samples.
- Be ready to demonstrate compliance to NCAs on demand.
- Staff Training and Awareness
- Train staff on new obligations and rationale, from PFOF ban to transparency rules.
- Emphasize consistent, client-first behavior in daily operations.
- Risk Monitoring
- Enhance monitoring of leverage, client losses, and suspicious trading.
- Use findings to adjust controls before regulators intervene.
- Scenario Testing
- Run mock inspections and reporting stress tests.
- Verify that appropriateness tests and governance procedures hold under scrutiny.
Case Studies & Scenarios
Below are three potential real-life problems that companies subject to MiFID II/MiFIR Review may encounter. The names of products, services, and businesses are fictitious.
Case Study 1: The Consolidated Tape Integration Challenge
The Problem: AlphaData, a financial data provider serving 180 institutional clients, faced mandatory contribution requirements to the new consolidated tape while simultaneously needing to purchase consolidated feeds for client redistribution. The firm's legacy data infrastructure couldn't handle bidirectional data flows required for both contribution and consumption.
The Solution: AlphaData partnered with RegTech specialist DataBridge to implement:
- Unified data platform: Cloud-native architecture handling both inbound and outbound consolidated tape feeds
- Real-time normalization: Automated conversion between venue-specific formats and standardized CTP schemas
- Revenue optimization: New consolidated data products generating €4.2 million additional annual revenue
Case Study 2: The Volume Cap Calculation Overhaul
The Problem: MultiVenue, operating four equity trading venues across the Netherlands, Belgium, and Italy, struggled with the transition from double volume cap (DVC) to single volume cap (SVC) mechanisms. The firm's venues exceeded the 4% individual venue threshold but remained below the 8% EU-wide limit, creating operational uncertainty about waiver suspensions.
The Solution: MultiVenue implemented proactive volume management by redistributing waiver-eligible volume across their four venues to stay below the 7% threshold, while simultaneously enhancing midpoint crossing and block trading capabilities for large orders as alternative execution methods. The firm also launched a comprehensive client education program that provided transparent communication about volume cap changes and available execution alternatives, ensuring clients understood the regulatory transition and available options for their trading needs.
New Reality After 29 September 2025
The post–29 September 2025 landscape is unforgiving. For CFD brokers, compliance with MiFID II/MiFIR is no longer about planning, it is about demonstrating, with evidence, that rules are applied in practice.
- Firms that embraced early compliance are already operating smoothly.
- Those that delayed now face remediation, supervisory audits, and potential enforcement.
- Case studies show that conflicts (PFOF), transparency (APA reporting), and marketing (client classification) are the most immediate pressure points.
The message from EU regulators is clear: the grace period is over. MiFID II/MiFIR review compliance is now the baseline standard, not a future goal.