MiFID II: What foundations need to know now

The updated Markets in Financial Instruments Directive brings with it actions and implications for foundations. We take a look at what foundations need to know ahead of its commencement in January 2018.

Your investment manager should be able to provide more information about the wider implications of the new regulation.


The Markets in Financial Instruments Directive (MiFID) is an EU legislative framework for investment managers and other intermediaries first implemented in 2007. Its aim is to increase transparency in financial markets, with a view to protecting investors and making trading across borders easier.

MiFID II, which comes into force on 3 January 2018, brings a number of changes to enhance the directive, one of which is the introduction of higher standards of reporting. As a result, when an entity is eligible for a legal entity identifier (LEI), it will have to have obtained it before the investment manager can place orders in shares, derivatives and other financial instruments such as bonds on their behalf.

There are several implications of this change to investment management regulation – and many investment managers are contacting clients directly to discuss them. This blog focuses on the main actions foundations need to take in preparation for its commencement.

Legal Entity Identifiers

For an investment manager to trade in the instruments above on behalf of a foundation, the foundation will need a legal entity identifier (LEI). A LEI is a globally recognised code which identifies each legally distinct party to a financial transaction.

LEIs are issued in the UK by the London Stock Exchange. They cost £115 + VAT initially with a further cost of £70 + VAT a year to maintain. Many of the larger investment management firms are facilitating the process for their clients and offering a discounted rate, but it is worth checking. Note that an entity only needs one LEI, so if a foundation has more than one investment manager, it does not need to obtain more than one LEI. Foundations only investing in collective vehicles directly will not need to obtain a LEI.

Every entity with a LEI is listed on a global public register, which displays similar information to that already available on the registers of the charity regulators.

If you feel that your investment activity may bring about further actions or you’d like to find out more, consult the Financial Conduct Authority’s MiFID II – Application and notification user guide. This sets out the key changes to MiFID’s scope. If you have any queries, contact the Financial Conduct Authority.


On one hand, MiFID II is another international regime which catches foundations incidentally – not dissimilar to the impact of the Common Reporting Standard. The burden of compliance and reporting lies with investment managers, who should be the first port of call for foundations. In this sense, MiFID II can be seen as another administrative cost of investing.

On the other hand, some perceive MiFID II as another way in which charities are regulated and documented, adding to the cumulative burden that many smaller charities have limited capacity to address.

In either case, foundations or other charity investors may wish to familiarise themselves with changes to the investment environment. The resources listed below are useful starting points.


Financial Conduct Authority: MiFID II 
Global Legal Identifier Foundation: Questions and Answers 
Legal Entity Identifier Regulatory Oversight Committee: Frequently Asked Questions 


Emma Hutchins
Policy and Communications Officer

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