The directly applicable European regulation accompanying MiFID II, covering pre- and post-trade transparency, transaction reporting, trading obligations and product intervention powers.
Where the directive requires national implementation, MiFIR applies as written across member states. It carries the transparency regime, including the deferral and waiver framework that determines when a large trade may be published late, and the share and derivative trading obligations.
Transaction reporting under MiFIR is the European analogue of the consolidated-audit-trail: firms report executed transactions with identifiers for the client, the decision maker and the algorithm, by the following day.
It also gives esma and national regulators product intervention powers, which is the legal basis for retail leverage caps on contracts for difference and the binary options ban.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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