Navigating MiFID III: Key Changes and Practical Challenges for Financial Firms

Thupayal Hussain
Apr 28
3 min read

Following our previous blog on EMIR 3.0 Clearing Thresholds, we now turn our attention to another major regulatory shift: MiFID III—a sweeping update that impacts transaction reporting, trading obligations, investor protection, and market transparency across the EU.

On 8 March 2024, the EU published updates to MiFID II and MiFIR in its Official Journal. Implementation is expected by late 2025 or early 2026 for EU firms, while the UK continues its review, potentially leading to further regulatory divergence.

Here's a practical breakdown of what’s changing—and what firms need to start planning for.

Key Changes Introduced Under MiFID III

Expanded Transaction Reporting & Instrument Data (Articles 26 & 27)
ESMA will strengthen transaction reporting, expanding field requirements and defining technical standards (RTS) to harmonize reporting across EMIR, SFTR, and MiFID regimes.
Revised Trading Obligation (Article 23):
Investment firms must ensure share trades (identified by ISIN) occur on a regulated market, reinforcing execution transparency.
Simplified Volume Cap (Article 5):
The dual 4%/8% cap is replaced with a single 7% cap on trades executed under waivers, streamlining oversight.
Changes to Best Execution Reporting:
Removal of RTS 27 and RTS 28 best execution reporting obligations for trading venues and systematic internalizers.
Ban on Payment for Order Flow (PFOF):
PFOF will be prohibited, with phased implementation for some jurisdictions by mid-2026.
Enhanced Retail Investor Protections:
Stronger requirements for suitability, disclosure, and marketing communications to retail clients.
Introduction of Consolidated Tape Providers (CTPs):
An EU-wide consolidated tape will provide near-real-time trading data across equities, bonds, and derivatives.

Deep Dive: Transaction Reporting Changes (Article 26)

Key Additions:

Effective Date/Reporting Timestamps aligned with EMIR Refit and SFTR.
Chain Identifiers for aggregated orders (similar to EMIR package identifiers).
Enhanced Client Identifiers for clearer reporting of non-entity counterparties.
DLT Identifiers, anticipating tokenized asset reporting under MiCA (Markets in Crypto-Assets Regulation).

Adjustments to Existing Fields:

Net Amount, Buyer/Seller Identifiers, Executing Entity, Underlying Instrument Code, Transmission of Order Indicator, Execution Within Firm—expanded to support new trade types.

Alignment and Removals:

Harmonization of Waiver and Post-Trade Indicators with EMIR standards.
Removal of the Short Selling Indicator field to streamline reporting.

Practical Challenges Firms Should Start Planning For

Based on our experience managing regulatory change, several real-world challenges are likely to emerge:

Data Gaps Across Front-to-Back Systems
Firms may find that some OMS or booking platforms cannot readily capture new mandatory fields—risking late or incomplete reporting.
Entity & Client Data Inconsistencies
New client identifier requirements will highlight weaknesses in client onboarding and master data management, particularly across regional operations.
Static Reference Data Pressures
The need to track and reconcile external identifiers like UPIs and DLT codes will strain legacy static data teams and systems.
Operational Bifurcation Risks
Divergence between EU MiFID III and anticipated UK rules will require firms to manage two regulatory reporting infrastructures—increasing costs and operational risk.
Change Fatigue Amid Overlapping Initiatives
MiFID III overlaps with EMIR 3.0, MiCA, and ISO 20022 implementations, making prioritization and resource planning critical to avoid regulatory delivery risks.

What Firms Should Do Now

Assess product flows and identify impacted asset classes and instruments.
Map new data points to front-to-back trade flows, ensuring OMS/EMS readiness.
Evaluate internal and external data providers for UPI, DLT identifiers, and chain codes.
Monitor FCA developments to plan for EU/UK bifurcation where necessary.

How RegEdge Can Help

At RegEdge, we offer a practical, experienced approach to MiFID III readiness:

Data Readiness Reviews
Testing and validating whether trade capture and reporting systems can source and enrich new reporting fields accurately and consistently.
Client & Entity Data Governance Frameworks
Designing practical workflows to align onboarding/KYC processes with enhanced client identifier obligations.
Cross-Regime Impact Analysis
Helping firms map where MiFID III, EMIR, MiCA, and UK divergence create overlapping or conflicting data/reporting obligations.
Reporting Framework Design
Building scalable controls, audit trails, and proactive exception management frameworks—including readiness for Consolidated Tape obligations.
Independent Assurance Reviews
Providing targeted gap assessments and reconciliations from trade execution to regulatory report submission, highlighting control gaps and remediation pathways.

Let’s Get Ahead of MiFID III Together

Regulatory change is rarely simple — and MiFID III will demand detailed planning across systems, governance, and trading operations.

At RegEdge, we work alongside financial firms to translate regulatory complexity into practical, actionable solutions — combining strategic oversight with hands-on execution.

If you would like to discuss how we can support your MiFID III readiness or broader regulatory reporting initiatives, please get in touch with our Leadership team in UK - Arjun Thirukonda and Sherin Desai.

We look forward to partnering with you.