Delegated act · European Commission
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
The main MiFID II Delegated Regulation: defines key terms (such as investment advice, systematic internaliser, algorithmic and high-frequency trading, and direct electronic access) and sets detailed organisational requirements and operating conditions for investment firms, including compliance, conflicts of interest, remuneration, client information, suitability and appropriateness, best execution, client order handling, reporting to clients, record keeping and transaction-level obligations.
Details
| Reference | Delegated Regulation (EU) 2017/565 |
|---|---|
| Issuer | European Commission |
| Published | 31 Mar 2017 |
| CELEX | 32017R0565 |
| In force / applies from | 20 Apr 2017, 3 Jan 2018 |
Provisions it relates to
- Article 2 MiFID II · ExemptionsLegal basis
- Article 4 MiFID II · DefinitionsLegal basis
- Article 16 MiFID II · Organisational requirementsLegal basis
- Article 23 MiFID II · Conflicts of interestLegal basis
- Article 24 MiFID II · General principles and information to clientsLegal basis
- Article 25 MiFID II · Assessment of suitability and appropriateness and reporting to clientsLegal basis
- Article 27 MiFID II · Obligation to execute orders on terms most favourable to the clientLegal basis
- Article 28 MiFID II · Client order handling rulesLegal basis
- Article 30 MiFID II · Transactions executed with eligible counterpartiesLegal basis
- Article 31 MiFID II · Monitoring of compliance with the rules of the MTF or the OTF and with other legal obligationsLegal basis
- Article 32 MiFID II · Suspension and removal of financial instruments from trading on an MTF or an OTFLegal basis
- Article 33 MiFID II · SME growth marketsLegal basis
- Article 52 MiFID II · Suspension and removal of financial instruments from trading on a regulated marketLegal basis
- Article 54 MiFID II · Monitoring of compliance with the rules of the regulated market and with other legal obligationsLegal basis
- Article 58 MiFID II · Position reporting by categories of position holdersLegal basis
- Article 64 MiFID II · Organisational requirements
Deleted by Directive (EU) 2019/2177; last in consolidated text 02014L0065-20211110.
Legal basis - Article 65 MiFID II · Organisational requirements
Deleted by Directive (EU) 2019/2177; last in consolidated text 02014L0065-20211110.
Legal basis - Article 79 MiFID II · Obligation to cooperateLegal basis
UK version: UK MiFID Org Reg (revoked).
Documents that refer to it
- Q&AAnsweredExplicit reference · 90%
AI summaryBefore accepting a mandate to manage an offering, a firm that advises on corporate finance and underwrites or places must tell the issuer about the targeted investors at least by type (for example horizon, size, nature and country), not necessarily individually, in line with its allocation policy and product governance duties.
- Q&AAnsweredExplicit reference
AI summaryAsked whether the systematic internaliser calculations are done at legal entity or group level and how branches are treated. ESMA deleted the question on 10 October 2025.
- Q&AAnsweredExplicit reference
AI summaryCosts paid in or represented in foreign currency, and currency conversion costs, must be included in aggregated ex-ante and ex-post costs disclosures; ex ante, firms must also state the currencies, conversion rates and conversion costs even without a request for an itemised breakdown.
- Q&AAnsweredExplicit reference
AI summaryFirms must aggregate costs and charges for the service and for the instruments, itemise third-party payments separately, and show the total as a cash amount and a percentage; on request they must give a breakdown at least by the Annex II cost items, showing an all-in fee under the relevant item and zero for items it covers.
- Q&AAnsweredExplicit reference
AI summaryAsked which transactions (non-price-forming, primary market, on-venue on behalf of clients, off-book trades reported to venues) count towards the systematic internaliser thresholds. ESMA deleted the question on 10 October 2025.
- Q&AAnsweredExplicit reference
AI summaryFinancial Transmission Rights are C(10) financial instruments when traded on the secondary market, including off venue, so MiFID II applies to secondary trading platforms for them; FTRs in the primary market entered into with or by a transmission system operator are excluded.
- Q&AAnsweredExplicit reference
AI summaryFor the high-frequency trading tests in Article 19 of Delegated Regulation 2017/565, firms calculate the message-rate indicator per instrument over its trading hours, sum the indicators across all relevant instruments on a venue for the second test, and apply them only to instruments ESMA lists as liquid at the time.
- Q&AAnsweredExplicit reference · 90%
AI summaryWith the client's express and revocable consent, the 10% depreciation reporting for leveraged or contingent liability instruments under Article 62(2) of the Delegated Regulation may be done on an aggregated basis, such as the whole portfolio or all leveraged positions, instead of instrument by instrument.
- Q&AAnsweredExplicit reference
AI summaryAlgorithms that only alert human traders to trading opportunities are not algorithmic trading, provided the execution itself is not algorithmic.
- Q&AAnsweredExplicit reference · 90%
AI summaryThe 10% depreciation report under Article 62(1) of the MiFID II Delegated Regulation is owed to professional as well as retail clients.
- Q&AAnsweredExplicit reference · 90%
AI summaryThe financing alternatives that a firm offering corporate finance advice and underwriting or placing must describe to an issuer may be limited to those suited to the issuer's needs, but should include non-investment services such as loans; the firm should also say which alternatives it did not consider and why.
- Q&AAnsweredExplicit reference
AI summaryFirms must check at least monthly whether they meet the HFT criteria in Article 19 of Delegated Regulation 2017/565, using message-rate estimates venues must provide on request; an unauthorised firm using HFT must seek authorisation immediately, and any algorithmic trader must notify its home authority and those of the venues it trades on.
- Q&ARejectedExplicit reference
AI summaryAsked whether an entity entering into distribution agreements with third-party intermediaries, as part of marketing tasks delegated by a UCITS management company, performs an outsourced critical or important function, and how proportionality applies. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference · 90%
AI summaryActing as manager or syndicate member in an offering does not in itself involve corporate finance advice, so Article 38(1) of the MiFID II Delegated Regulation applies only if such advice is also given to the issuer; the other underwriting and placing rules apply in all cases.
- Q&AAnsweredExplicit reference
AI summaryDEA users can be high-frequency traders if they meet the HFT definition and message thresholds; they may rely on data from their DEA provider to assess this, but remain responsible for checking that it reflects only their own proprietary trading in liquid instruments.
- Q&AAnsweredExplicit reference
AI summaryTrading with an algorithm that involves only a few processes, such as quotes that replicate a venue's prices, is still algorithmic trading.
- Q&AAnsweredExplicit reference
AI summaryCalls and electronic communications that only discuss investment options must be recorded under Article 16(7) MiFID II if they are intended to, and may, result in a transaction, even where no trade can be entered during the interaction and the order is placed through another channel.
- Q&ARejectedExplicit reference
AI summaryAsked whether perpetual futures offered by a Cyprus investment firm through an EU MTF fall within the 'other derivatives' (C10) category and what leverage limits apply. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference · 90%
AI summaryPortfolio managers may give the annual ex-post costs and charges information in the Article 60 periodic statement, but it must then meet Article 50(9)-(10) in full; quarterly or monthly statements do not remove the need to give clients an annual aggregate of costs.
- Q&AAnsweredExplicit reference
AI summaryTo convert lot-based open interest thresholds (10,000 lots in Article 83(1)(b) of Delegated Regulation 2017/565, 300,000 lots in Article 57(1) MiFID II) into energy units, ESMA uses the monthly contract as one lot: 720 MWh for gas and base-load power and 264 MWh for peak-load power, with MMBTU and therm equivalents worked out.
- Q&ARejectedExplicit reference
AI summaryAsked how investment advice is attributed in split or system-supported workflows, and what organisational features evidence advice given 'under supervision'. ESMA rejected the question, so there is no answer.
- Q&ARejectedExplicit reference
AI summarySought clarification of 'under supervision' in ESMA's guidelines on knowledge and competence (ESMA/2015/1886), covering real-time versus after-the-event supervision, responsibility and supervisory sign-off in investment advice. ESMA rejected the question, so there is no answer.
- Q&ARejectedExplicit reference
AI summaryAsked whether the presumption in Article 54(3) of the MiFID II Delegated Regulation that professional clients have the necessary knowledge and experience can ever apply, given that Article 54(6) looks to the natural person representing a legal entity. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference · 90%
AI summaryFirms may not agree with clients to use a depreciation threshold higher than the 10% (and multiples of 10%) set in Article 62 of the MiFID II Delegated Regulation, such as 15%.
- Q&AAnsweredExplicit reference
AI summaryA firm that merely transmits a client order to another firm that executes it algorithmically is not itself engaged in algorithmic trading.
- Q&AAnsweredExplicit reference
AI summaryTied agents are relevant persons, so the requirement in Article 27(4) of the MiFID II Delegated Regulation to balance fixed and variable remuneration applies to them, though Recital 41 allows a larger variable share given their special status; Member States using the Article 3 exemption must apply at least analogous remuneration rules.
- Q&ARejectedExplicit reference
AI summarySought clarification of record-keeping for staff advising 'under supervision' under ESMA's knowledge and competence guidelines (ESMA/2015/1886), including evidence of sign-off and the use of a qualified person's credentials in digital workflows. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference · 90%
AI summaryShares or units in non-UCITS collective investment undertakings are complex per se under Article 25(4)(a) MiFID II and cannot be reassessed as non-complex under Article 57 of the Delegated Regulation, so execution-only services in them require an appropriateness assessment.
- Q&AAnsweredExplicit reference · 90%
AI summaryA firm 'holds a retail client account' for Article 62(2) of the MiFID II Delegated Regulation if it provides safekeeping and administration of the client's instruments or holds an account recording the client's transactions as part of an investment service.
- Q&AAnsweredExplicit reference · 90%
AI summaryPortfolio managers serving retail clients should meet the Article 25(6) MiFID II duty to explain periodically how the investments meet the client's preferences and objectives within the Article 60 ex-post periodic report, on the same deadlines, assessing the portfolio as a whole, with the format left to the firm.
- Q&AAnsweredExplicit reference
AI summaryFor the DEA definition, 'exercise discretion regarding the exact fraction of a second' refers to the DEA user's control over when it sends an order, not when the order reaches the matching engine, given the delays added by mandatory filters and networks.
- Q&ARejectedExplicit reference
AI summaryAsked whether a structured deposit with one return variable at maturity remains non-complex under Article 25(4)(a)(v) MiFID II when early exit pays the option's market value, which depends on several variables. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference
AI summaryThe quarterly statement of client financial instruments and funds under Article 63(1) of the MiFID II Delegated Regulation should be sent as soon as possible after the period ends; sending it more than one month later is untimely unless the firm can justify a compelling reason.
- Q&AAnsweredExplicit reference
AI summaryAn automated order router that sends the same unmodified order to several venues, and cancels the unexecuted copies once one is filled, is not algorithmic trading, because it only chooses venues and changes no other order parameter.
- Q&AAnsweredExplicit reference · 90%
AI summaryPositions in C(10) instruments must be reported only where their underlyings fall within the position limits regime, since daily position reporting exists to monitor compliance with those limits.
- Q&AAnsweredExplicit reference
AI summaryAsked at what level the systematic internaliser thresholds are calculated for derivatives, structured finance products, bonds and emission allowances. ESMA deleted the question on 10 October 2025.
- Q&ARejectedExplicit reference
AI summaryAsked how the exemptions in Article 2(1)(c) (incidental services in a regulated profession) and Article 2(1)(k) MiFID II should be interpreted. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference
AI summaryAsked when ESMA would publish EU-wide trading volumes and when firms had to run their first and later systematic internaliser assessments. ESMA deleted the question on 10 October 2025.
- Q&ARejectedExplicit reference
AI summaryAsked whether investment advice is attributed to whoever communicates the personal recommendation rather than whoever produces the suitability statement, and whether these steps can be split in automated processes. ESMA rejected the question, so there is no answer.
- Q&AAnsweredExplicit reference
AI summaryWhere a client places an order at a face-to-face meeting by signing a written form or contract, that document must contain at least the information required by Article 76(9) of the MiFID II Delegated Regulation, with any missing details recorded separately.
- Q&AAnsweredExplicit reference · 90%
AI summaryUnder Article 62(1) of the MiFID II Delegated Regulation, a firm need not report again each time the same depreciation threshold is crossed within a reporting period; a new report is due only when a further threshold is exceeded.
- Q&ARejectedExplicit reference
AI summaryAsked whether suitability questionnaires must collect information in a set order: knowledge and experience first, then financial situation and investment objectives. ESMA rejected the question, so there is no answer.
FCA Handbook
Handbook provisions whose source note cites it:
- MAR 5.10.3G · The contents of an application for registration as an SME growth market
- MAR 5.10.7R · Deregistering an MTF as an SME growth market
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