Effective from 1 November 2007, MiFID-Markets in Financial Instruments Directive, replacing ISD-Investment Services Directive.
Question is what was MIFID or ISD used for or scope of them? Reason for introduction of MiFID II & MiFIR Lets dig into the details of the same.

MiFID is the base of the European Commission’s Financial Services Action Plan, which consists of 42 measures which has significantly change how EU financial service markets operate over the years.
MiFID is an European Union law that regulates investment services operation across the 31 member states of the European Economic Area.

By now we know its a regulatory law but its quite old. Global financial crisis made the European Commission (Commission) decided to review the MiFID framework. This resulted in revised Markets in Financial Instruments regime (MiFID II/ MiFIR). While MiFID created competition between these services and brought more choice and lower prices for investors, shortcomings were exposed in the wake of the financial crisis.

In October 2011, the European Commission tabled proposals to revise the Markets in Financial Instruments Directive (MiFID 2) with the aim of making financial markets more efficient, resilient and transparent, and to strengthen the protection of investors

What is new with (MiFID II/ MiFIR) Framework?

MiFID II is changing the logic of the initial MiFID I framework. Until now, the MiFID regulation intended to regulate the financial markets, the financial intermediaries and the financial services rendered to the investors by those intermediaries.

With the MiFID II framework the EU has expanded the reach of the regulation, i.e. the guidelines are relevant for (i) financial intermediaries and distributors of financial products, (ii) the financial markets and execution venues and, this is clearly a move up the value chain, (iii) the manufacturers of financial products.
Lets try to Understand the Impact on various actors of the financial market food chain
The regulation will have substantial impacts on the service model of any financial group in the EU and beyond.

The main drivers for these impacts are:
Inducement ban/ repayment in case of ‘independent advice’ or discretionary portfolio management;
Enhanced investor information and transparency rules regarding ‘cost of advice’ and ‘cost of products’;
Re-definition of execution venues (i.e. systematic internalisers and organised trading facilities (OTFs)).
Increased transparency requirements on transactions and quoting for banks, brokers and trading venues;
Stricter transaction reporting regime for participants in the financial markets;
New trading obligation and clearing obligations.

My area of interest would be understanding the impact on the product manufactures, what would be the change we are going to face.
Product manufacturers are for the first time impacted by MiFID rules and guidelines. These guidelines are not replacing or ‘over writing’ the product specific regulations such as UCITS or AIFMD. Hence the MiFID II requirements are to be complied in conjunction with the product requirements but going forward, ESMA considers that the European Commission should consider the possibility to align the relevant UCITS and AIFMD articles with the product governance obligations for manufacturers.

Product distributors have been since 2007 regulated by the MiFID rules. The MiFID II guidelines are neither changing substantially the logic of investor classification (i.e. suitability and appropriateness) nor the principles of execution of trades.

However, MiFID II has been drafted post financial crisis and after more than 10 years of ‘track record’ with MiFID I. As such, the approach to financial intermediaries within the EU has undergone major shifts, in particular regarding product placement remuneration (advice fees) and the complexity of financial products (i.e. complex vs non-complex financial instruments).

Providers in the financial markets are heavily impacted along the complete trading chain. As MiFIR aims to provide an integrated, efficient and transparent financial market through an increased and more in-depth transparency regime as well as new rules regarding the initiation and operation of trades and the handling of post trades, providers acting on the financial markets now face an increased operational effort in the handling of trades.