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MiFID II / MiFIR: International regulators do not pause

 

There is one section of the final declaration of the G20 summit in Pittsburgh in 2009 that concerns the financial sector ever since:


[…] Improving over-the-counter derivatives markets: All standardized OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest.  OTC derivative contracts should be reported to trade repositories.  Non-centrally cleared contracts should be subject to higher capital requirements. [more]


After obligations for central clearing and reporting (EMIR, Dodd Frank) and higher capital requirements for non-centrally cleared contracts (CRR), regulators now address the obligation to trade on exchanges or electronic trading platforms only by revising MiFID. Based on the experience of the last few years the rules of MiFID are subjected to a detailed revision.

 

According to CRD IV / CRR, with the overall goal to establish a single rulebook for EU financial markets, essential aspects will be put into a regulation, called “Markets in Financial Instruments Regulation” (MiFIR), that immediately becomes effective for all member states when adopted. Other rules constitute a directive, called MiFID II, that after adoption needs to be transferred into national law.

 

The extension of commerce at trading venues and the associated infrastructural changes are only one key aspect of the revision of MiFID to be addressed. Others include:

  • Enhanced pre and post trade transparency requirements for a wide range of products
  • Transaction reporting for instruments other than derivatives to the competent authorities
  • Obligation to trade derivatives on eligible platforms only
  • Extension of scope through expanded product list and elimination of specific exemptions
  • Introduction of rules for algorithmic and high frequency trading
  • Expansion and enhancement of the investor protection framework
  • Stricter requirements regarding corporate governance and compliance
  • Extension of the rights of competent authorities

Next steps

The trialogue negotiations concerning MiFID II / MIFIR held between the European Parliament, Council and Commission were successfully concluded on 14 January 2014. On 15 April 2014, the European Parliament adopted both texts. MiFID II / MiFIR were published in the Official Journal of the European Union on 12 June 2014. The original intention was that the requirements should take effect starting 3 January 2017. However, due to the complexity of the requirements, the EU Parliament decided on a one-year deferral. The decision was reached on 7 June 2016 and adopted on 17 June 2016. Thus, the requirements will now be effective starting 3 January 2018. Each member state is required to transpose the MiFID requirements into its national legislation by 3 July 2017. These shall also apply as of 3 January 2018.

 

At the end of April 2014, the EU commissioned ESMA to assist in the development of delegated acts. Following a consultation period, ESMA published its technical advices for the delegated acts for the implementation of MiFID II / MiFIR in the Spring of 2016. The regulatory and implementing standards are currently being published incrementally (June 2016).

 

Our support – your benefit

We give support with experienced experts for all aspects of the new regulatory context:

  • Take advantage of our market overview regarding MiFID II / MIFIR
  • Clarify with us, how far your enterprise is affected by the extension of scope
  • Review with us the impact of new and more stringent requirements on your transactions, processes and systems
  • Benefit from our high implementation skills in the efficient translation of the jointly planned adjustments into your systems and processes

For detailed information about our references and our approach to MiFID II / MIFIR, please call +49 69 907370 or email to info@remove-this.d-fine.de, keyword "MiFID II".