MiFID II trade surveillance requirements

Firms operating in European markets face growing pressure to prove that their trade surveillance programs work: consistently, in real time, and under regulatory scrutiny.

MiFID II remains the framework against which that capability is measured. In 2025, compliance isn’t judged by policies on paper, but by how well systems detect abuse, record behaviours, and support investigations across every asset class and venue.

This article outlines exactly what firms need to get right, from data integration and reporting accuracy to algorithmic oversight and governance. If your surveillance setup isn’t built to scale, audit, and adapt, this is where to start.

Understanding MiFID II surveillance obligations

MiFID II (Markets in Financial Instruments Directive II) is an EU regulation introduced in 2018 that requires firms to have comprehensive systems for monitoring trading activity, detecting market abuse, and providing timely, accurate reporting to regulators.

Key obligations checklist:

• Transaction reporting – Submit complete and accurate reports under MiFIR to the relevant NCA.
• Order recordkeeping – Maintain detailed records of all orders, modifications, and cancellations for at least five years.
• Communication surveillance– Record and store relevant telephone and electronic communications relating to orders and transactions.
• Market abuse detection – Monitor trading to identify patterns of manipulation, insider trading, and other abuses (see MAR Compliance Guide).
• Algorithmic trading controls – Ensure oversight of algo strategies, including kill-switch capabilities.

The practical challenges of MiFID II compliance

MiFID II sets a high bar for surveillance, requiring firms to manage vast datasets, integrate diverse information sources, and maintain strong oversight of trading activity. Addressing these demands calls for structure, clarity, and resilience. The main challenges are:

• Managing high volumes of structured and unstructured data across multiple venues.
• Integrating trade data with communications records for a full audit trail.
• Ensuring that algorithmic trading is monitored and controlled in real time.

Building a strong MiFID II surveillance framework

A strong MiFID II surveillance framework is built on structure, accuracy, and adaptability. By aligning technology, processes, and governance, firms can meet regulatory expectations while supporting long-term operational resilience. The essential building blocks are:

1. Centralise trade and comms data: Unify trading, order, and communication data into a single surveillance platform for full context.
2. Validate transaction reporting: Implement pre- and post-submission checks to ensure accuracy and completeness.
3. Monitor algorithmic trading in real time: Use latency-sensitive detection tools to capture potential manipulation quickly.
4. Leverage AI for pattern recognition: Augment rules-based monitoring with AI models to identify evolving abuse behaviours.
5. Document governance and controls: Maintain clear procedures for investigations, escalation, and regulator interaction.

The Trapets advantage

Trapets combines regulatory expertise with advanced technology to help firms meet MiFID II requirements with confidence. Our solutions are designed to simplify complexity and strengthen compliance across markets. 

The key advantages are:

• Integrating transaction, order, and comms data in a single platform.
• Offering automated transaction reporting validation.
• Supporting MAR, MiFIR, and cross-border regulatory requirements in parallel.

MiFID II compliance is as much about operational discipline as it is about meeting legal obligations. With the right technology and governance, firms can not only meet today’s requirements but also anticipate tomorrow’s.

Talk to a Trapets expert to learn how technology can help you stay compliant with MiFID II.