MiFID II in short

The Markets in Financial Instruments Directive II (MiFID II) is a regulation that came into force on 3 January 2018. MiFID II will enhance investor protection and establish a safer, more open and more responsible financial system. With MiFID II the European Union has created a single rulebook covering financial market activities and services.

The history of MiFID II The MiFID II sisters Important documents Top 5 Counterparties The history of MiFID II

The first step in a common EU regulation was the Investment Services Directive from 1993. The next step was MiFID I from 2007 that created a single market for investment services and activities to improve the competitiveness in EU markets. MiFID II is an expansion of the existing MiFID I combined with Markets in Financial Instruments Regulation (MiFIR). The financial crisis 2007-2008 showed deficiencies in MiFID I and the updated regulation has focus on transparency and investor protection.

The MiFID II sisters

Two other EU regulations are connected to MiFID II: PRIIPS (regulation on Packaged Retail Investment and Insurance Products) and EMIR (European Market Infrastructure Regulation). PRIIPS introduces a Key Information Document (KID) – a simple document giving key facts to investors in a clear and understandable manner so it has a connection to the investor protection rules of MiFID II.

EMIR regulation aims at reducing counterparty and operational risk in the Over the Counter (OTC) derivatives market, which was identified as a contributing factor to the financial crisis in 2008. One of the EMIR requirements was Legal Entity Identifier (LEI) that is now aligned with MiFID and is to be used in transaction reporting for some products.

Important documents Top 5 Counterparties


A summary of the analysis and conclusions drawn of the information on the top five execution venues and quality of execution obtained applicable to any class of financial instruments

In line with Nordea Bank S.A.’s (NBSA) execution policy, no differentiation is made between private (i.e. retail) and professional clients when executing orders for any class of financial instrument. All orders are executed in line with the highest client protection, i.e., as if executing an order for a private client. 

Factors influencing the choice of venue include: price, cost, speed, likelihood of execution, handling of volume and special orders and settlement. In regard to settlement, in most cases NBSA executes orders with counterparties who offer electronic settlement solutions, to improve cost efficiency. Given the nature of NBSA’s business, ‘handling of volume and special orders’ is deemed to have negligible impact given the size of orders executed relative to the overall traded volume, in general terms. Most equity and derivative orders are executed via FIX connectivity solution and bond orders are executed via Bloomberg, both solutions that offer a fast and cost efficient order handling. With regard to ‘price’ all equity and derivative orders are traded by European regulated counterparties on regulated markets and, as such the price transparency is available at all times. With regard to bond transactions, NBSA operates with an open architecture, does not interact in proprietary trading, with the aim of facilitating the best possible price available at any time in OTC related transactions.

Most Nordic orders are executed via Nordea Markets, a unit of Nordea Bank AB, the parent company of NBSA. There are no specific arrangements in place with Nordea Bank AB regarding discounts on market standard fees for related order handling. NBSA pays fees in line with those being paid to other counterparties.

On three specific product categories NBSA only operates with one counterparty, currency derivatives, physical metals and securities financing transactions. Currency derivatives are only traded with Nordea Bank AB.

Physical metals are stored and traded with Kredietbank Luxembourg and securities financing transactions are executed via SEB for both product categories where less than one order is executed per business day. 

The factors that have led to the changes in the list of approved counterparties relate to excessive transaction costs, and/or lack of an adequate product offering in relation to our clients’ interests.