Introduction
The Markets in Financial Instruments Regulation (MiFIR) has long been a cornerstone of transaction reporting and market transparency in the European Union and the United Kingdom. With MiFIR III on the horizon, 2025 is set to bring the most significant overhaul to transaction reporting since the original MiFID II regime. As both the EU and UK embark on parallel but increasingly divergent regulatory paths, financial firms face new challenges in compliance, data management, and operational strategy. This blog examines the upcoming MiFIR III transaction reporting changes, the evolving regulatory landscape, and how firms can prepare for the challenges ahead.
The Global and UK Impact of MiFIR III Changes
MiFIR 3 is not just a technical update, it represents a strategic shift in how market data is collected, reported, and analyzed across Europe and the UK. These reforms are expected to bolster market transparency, refine reporting obligations, and ensure a level playing field for investors. For the UK, MiFIR III also marks a clear move away from the EU framework, reflecting the post-Brexit regulatory agenda and the Financial Conduct Authority’s (FCA) drive for tailored, data-driven oversight.
The implications are profound:
- For global firms: Navigating dual regimes means adapting systems to meet both EU and UK requirements, increasing compliance complexity and operational costs.
- For the UK market: The FCA’s commitment to robust, accurate transaction reporting is underscored by recent enforcement actions and ongoing consultations, signaling that compliance failures will not be tolerated.
- For the EU: The introduction of the consolidated tape and enhanced transparency rules aims to address market fragmentation and improve data quality, but also demands significant system upgrades and process changes.
Key Timeline and Milestones
Understanding the MiFIR III timeline is crucial for compliance planning. Here are the key milestones for 2024–2026:
Date | EU Developments | UK Developments |
Mar 2021 | ESMA publishes MiFIR Article 26 review, setting stage for legislative change | HM Treasury launches Wholesale Markets Review |
Mar, 2024 | MiFIR Review enters into force; triggers RTS development | UK consults on post-Brexit MiFIR reforms |
Oct, 2024 | ESMA publishes Consultation Paper on revised RTS 22; consultation runs until Jan 2025 | FCA seeks industry feedback on simplification (DP24/2) |
July 2025 | ESMA released a final report in early July summarising feedback on simplifying MiFIR reporting frameworks (RTS 22, 23 & 24), with a call for evidence open until 19 September 2025 | ESMA offering two options for reporting simplification: Option A: No immediate changes to technical standards, freezing implementation efforts.
Option B: Shift to a “report once” unified template covering multiple regimes (MiFIR, EMIR, SFTR). |
Late 2025 | EU likely to approve new RTS 22; 12-month implementation period expected | UK finalizes MiFIR reforms, new rules potentially effective in 2026 |
2026 | New EU requirements likely apply (after technical implementation) | UK firms transition to revised regime, with possible divergence and implementation in 2026 |
Firms operating in both jurisdictions must track these schedules closely, as divergence in reportable fields, definitions, and scope is expected to increase.
Regulatory Divergence: EU vs UK
EU Direction
- Expanded Data Fields: New and modified fields to align with other regulations and improve granularity, especially for derivatives.
- Consolidated Tape: Introduction of a consolidated tape provider to aggregate post-trade data, initially for bonds, with plans for equities and ETFs.
- Transparency and Best Execution: Enhanced pre- and post-trade transparency, standardized thresholds, and stricter best execution requirements.
- General Ban On PFOF: MIFID III offsets out a general ban on payment for order flow, a practice pursuant to which brokers receive payments for forwarding orders to certain trading platforms.
UK Approach
- Simplification and Flexibility: The FCA is reviewing the regime to reduce unnecessary burdens and improve data usefulness for regulators.
- Potential Divergence: The UK may redefine reportable fields and introduce unique transparency and reporting requirements, moving further from the EU model.
- Enforcement: The FCA has demonstrated a willingness to fine firms for reporting failures, emphasizing the importance of accurate, timely data.
Key Resources for Compliance
To stay ahead, firms should monitor:
- ESMA publications and consultation papers for EU technical standards and implementation guidance, prepare to maintain current RTS compliance through 2026, while monitoring upcoming guidance on pre-trade controls and consolidated reporting frameworks.
- FCA and HM Treasury updates for UK-specific rule changes and consultation outcomes. For UK Firms – Watch for upcoming H2 2025 consultation.
- Industry analysis and legal tools (e.g., Linklaters Law Compare) to track and compare regulatory divergence.
How Reg-x Innovations Can Help
As MiFIR III ushers in a new era of regulatory complexity, Reg-x Innovations stands ready to support financial institutions with advanced, automated solutions for transaction reporting and compliance. Our platform is designed to adapt rapidly to evolving EU and UK requirements, ensuring data accuracy, seamless integration, and robust audit trails. With real-time updates and expert support, Reg-x Innovations empowers clients to navigate regulatory divergence with confidence and efficiency.
