What aspect of trading does MIFID II expand upon?

MiFID II, or the Markets in Financial Instruments Directive II, is a comprehensive regulatory framework that significantly enhances the regulation of financial markets in the European Union, particularly with respect to trading practices. One key aspect that MiFID II expands upon is the electronic trading of Organised Trading Facilities (OTFs).

OTFs are a newly defined category of trading venue under MiFID II, allowing for the execution of non-equity instruments such as bonds, structured finance products, and derivatives. MiFID II establishes stricter trading requirements and standards for OTFs, aimed at enhancing transparency, improving market efficiency, and ensuring better investor protection. This regulatory shift recognizes the increasing dominance of electronic trading in the financial markets, addressing the complexities and risks associated with it.

In contrast, the other options do not capture the specific enhancements made by MiFID II. Agency trading in stocks, traditional open outcry systems, and short selling restrictions are all significant to market operations but do not receive the same expansion and reinforcement under MiFID II as OTFs do. Thus, the focus on electronic trading of OTFs as a central theme under MiFID II showcases the directive's alignment with modern trading practices and the evolution of financial markets into more technologically advanced arenas.