MiFID II

Definition

MiFID II (Directive 2014/65/EU, with the accompanying MiFIR regulation) is the EU framework for investment firms, trading venues and the provision of investment services. It has applied since 3 January 2018 and was retained in UK law after Brexit. Fund management companies are regulated under the UCITS and AIFM directives rather than MiFID, but MiFID II governs the banks, brokers, advisers and platforms that distribute funds, so it shapes what data a fund must supply to them.

Why it matters

Four MiFID II requirements touch fund data directly. Product governance obliges manufacturers to define a target market and distributors to check clients against it. Costs and charges disclosure requires aggregated ex-ante and annual ex-post statements of all product and service costs, including transaction costs. Suitability and appropriateness assessments need a product's risk and complexity characteristics. Inducement rules restrict what distributors can receive from fund houses. The industry exchanges this information in the standardised European MiFID Template (EMT).

In the API

FundFacts API is not an EMT feed, but its payload supplies the fund-level facts a distributor's tooling checks against: cost figures in headlineMetrics.ter, the KID risk indicator in riskRating, the objective, asset class and structure. Example values:

json
{
  "riskRating": 4,
  "keyFacts": { "assetClass": "Mixed Allocation" },
  "headlineMetrics": { "ter": 1.80 },
  "structure": "UCITS (Luxembourg SICAV)"
}

Common pitfalls

MiFID II costs and charges are broader than the ongoing charges figure: they include transaction costs, incidental costs and the distributor's own fees. Target-market data comes from the manufacturer's EMT, not from the factsheet. Do not treat the risk indicator alone as a suitability decision; it is one input among several. See the compliance monitoring use case.