Why this update matters in 2026

MiFID II and MiFIR are not “static” rulebooks. The MiFID II / MiFIR review entered into force on 28 March 2024, with the transposition deadline for MiFID II amendments set for 29 September 2025—and a significant portion of the detail is being delivered through Level 2 measures and operational/IT implementation steps over time.

For investment firms, 2026 is therefore about two parallel tracks:

1. staying aligned with the revised EU market structure and transparency regime, and
2. responding to supervisory convergence actions (ESMA + national regulators) that are increasingly focused on real-life distribution practices, digital channels and conflicts.

1) EU rulebook transition: MiFID II / MiFIR review is still “in implementation mode”

ESMA has highlighted that the revised framework is phasing in, with Level 2 measures developed sequentially and a need for updates to ESMA IT systems and MiFIR registers.

What this means in practice:

• Firms should not treat “2025 transposition” as the end point. Implementation continues through 2026 as technical standards and IT changes are finalised.
• Firms should expect continued clarifications and transition statements from ESMA and the European Commission, particularly where regimes change through staged entry into application.

2) Conflicts of interest is a 2026 supervisory “headline”

In December 2025, ESMA announced a Common Supervisory Action (CSA) with national competent authorities on MiFID II conflicts of interest in the distribution of financial instruments, to be carried out during 2026.

ESMA’s CSA focus areas are particularly relevant for Cyprus-based firms distributing products cross-border:

• Remuneration and inducements and whether they influence product selection offered to retail clients
• the role of digital platforms in steering clients toward certain products
• how firms manage conflicts between firm profitability and the client’s best interests

Practical implication: For many firms, “conflicts” will be tested as a distribution operating model issue, not just a policy requirement—especially where online journeys, affiliates, call centres, or platform nudges affect outcomes.

3) Sustainability is moving from “disclosure” to “substantiation”

CySEC has continued to circulate ESMA work aimed at ensuring sustainability-related claims are clear, fair and not misleading, including ESMA’s thematic note on ESG strategies (ESG integration and exclusions) circulated via CySEC Circular C752 (21 January 2026).

Separately, CySEC has also referenced ESMA’s supervisory work on MiFID II sustainability requirements (suitability and product governance), including reviews covering 2 August 2022 to 31 December 2024 for certain firms providing investment advice/portfolio management to retail clients.

Practical implication: In 2026, sustainability in MiFID is less about “adding a sentence” and more about:

• how ESG preferences are collected and used,
• how product governance supports ESG features,
• and whether marketing and client communications match the firm’s actual process and strategy.

What investment firms should do now (2026 readiness checklist)

• Map distribution conflicts across the full customer journey (including digital steering, remuneration, inducements, third-party marketing).
• Stress-test product governance: target market, cost/value, and suitability logic—especially for cross-border retail distribution.
• Refresh sustainability governance: align suitability, product governance, and marketing claims; document the rationale and evidence behind ESG language.
• Maintain a MiFID review tracker: follow ESMA’s phased implementation outputs so internal change management does not lag behind Level 2/IT changes.

Conclusion

MiFID compliance in 2026 is defined by transition + supervisory scrutiny. The firms that will be best positioned are those that treat conduct obligations as operational controls—not only documentation—and can evidence how governance, incentives, digital distribution and suitability align with the client’s best interest.

The content of this article is intended solely for general information purposes and does not constitute, and should not be construed as, professional advice or a formal opinion.

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