Now let's have a look at some monster legislation, the Dodd-Frank Act in the US. This is a huge piece of legislation, affecting almost all parts of the US financial sector. It's 22,000 pages long, approximately. Of course, the Dodd-Frank Act is a response to the very serious financial crisis we saw in 2007 and 2008. No surprise, it deals with improving financial stability, well, that was certainly a problem in 2008, right? It deals with orderly liquidation. Well, we saw the liquidation of Lehman Brothers, that wasn't particularly orderly. Next time, we are hoping to do it better. But on top of that, it deals with financial advisors, it regulates financial advisors, it tries to streamline banking regulation, which is ironic of course, because it's 22,000 pages, and there has been criticism against the Dodd-Frank in that it favors bigger players. Of course, if you're a small player, it's going to be very hard to read 22,000 pages of legislation. The Dodd-Frank Act also looks at insurance, transparency in the market, clearing, investor protection, and it contains the Volcker rule. Of course, the Volcker rule puts limits on proprietary trading. What does that mean? Well, it means that deposit taking institutions i.e, most investment banks and banks, of course, cannot engage in proprietary trading. So what is the monster legislation in the EU? Well, it's MiFID. Everyone who trades on European markets is affected by MiFID.

And MiFID is harmonized legislation within the EU to increase competition, to protect consumers, and reduce systemic risk. Well, we recognize this from the thinking behind the Dodd-Frank Act in America. Well, it started in 2007 with MiFID or MiFID 1. MiFID 1 dealt with authorization, how we categorize clients, how we handle orders, the transparency of the markets, and how we offer best execution to clients. In other words, focus on treating your customers fairly. When MiFID was implemented in 2007 a lot of people said, well, MiFID impacts how we do business. We still do the same business, but it impacts how we do business. Then of course, the financial crisis happened. MiFID 2 was agreed in 2014 and implemented fully in 2018, and it has a much increased scope. Prohibition of inducements is probably the most famous part of this one. This is the unbundling of research, some of you would've heard about, it is no longer allowed to charge for research through trading commissions. But on top of that, we're looking at stricter governance rules, stricter sanctions if you break the rules, we have the creation of OTFs, organized trading facilities, and much, much more. MiFID 2 is absolutely huge, and it's estimated it contains around about one and a half million paragraphs.