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MiFID II

MiFID II

MiFID II/MiFIR will apply from 3 January 2018.  This new legislative framework will strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.

MiFID and Investor Protection MiFID and Investor Protection

Background

MiFID is the Markets in Financial Instruments Directive (2004/39/EC). It has been applicable across the European Union since November 2007. It is a cornerstone of the EU's regulation of financial markets seeking to improve their competitiveness by creating a single market for investment services and activities and to ensure a high degree of harmonised protection for investors in financial instruments.

MiFID sets out:

  • conduct of business and organisational requirements for investment firms;
  • authorisation requirements for regulated markets;
  • regulatory reporting to avoid market abuse;
  • trade transparency obligation for shares; and
  • rules on the admission of financial instruments to trading.

On 20 October 2011, the European Commission adopted a legislative proposal for the revision of MiFID which took the form of a revised Directive and a new Regulation. After more than two years of debate, the Directive on Markets in Financial Instruments repealing Directive 2004/39/EC and the Regulation on Markets in Financial Instruments, commonly referred to as MiFID II and MiFIR, were adopted by the European Parliament and the Council of the European Union. They were published in the EU Official Journal on 12 June 2014.

MiFID II improvements

MiFID II and MiFIR will ensure fairer, safer and more efficient markets and facilitate greater transparency for all participants. New reporting requirements and tests will increase the amount of information available, and reduce the use of dark pools and OTC trading.  The rules governing high-frequency-trading will impose a strict set of organisational requirements on investment firms and trading venues, and the provisions regulating the non-discriminatory access to central counterparties (CCPs), trading venues and benchmarks are designed to increase competition.

The protection of investors is strengthened through the introduction of new requirements on product governance and independent investment advice, the extension of existing rules to structured deposits, and the improvement of requirements in several areas, including on the responsibility of management bodies, inducements, information and reporting to clients, cross-selling, remuneration of staff, and best execution.

      Legal Entity Identifiers (LEI)

ESMA’s role

ESMA, having completed the technical standards and technical advices, has contributed to the smooth implementation of MiFID II/MIFIR by issuing Q&As, and Guidelines, which will be updated when necessary.

On an ongoing basis, ESMA will have a number of duties including:

  • the on-going publication of information on its website (e.g. reference data or volumes of trading executed under certain waivers for the purpose of the double volume cap mechanism),
  • the production of reports in cooperation with the European Commission (e.g. on the functioning of OTF or SME growth markets),
  • the registers on trading venues, data reporting service providers investment firms and systematic internalisers, 
  • the monitoring and publication of opinions of how certain provisions are implemented (e.g. implementation of position limits or use of pre-trade transparency waivers), and
  • specific product intervention powers where ESMA and national supervisors are able to temporarily prohibit or restrict the marketing, distribution or sale of a financial instrument or a type of financial activity or practice where certain conditions are met.

Timeframe

  • 3 January 2018

    MiFID II and MiFIR apply within Member States

  • 6 December 2017

    Transparency calculations, suspensions and restoration

  • 31 July 2017

    Transparency data collection, interface to support double volume cap

  • 3 July 2017

    MiFID II transposed into national law of Members States

  • 30 June 2017

    Publication of ESMA opinion on ancillary activity under MiFID II – market size calculation

  • 19 June 2017

    ESMA published one Consultation Paper (ESMA70-156-71) to gather views on draft RTS on the trading obligation for derivatives preceded with one Discussion Paper (2016/1389)

  • 01 June 2017

    Instrument refernce data collection, provisions to NCAs and publication

  • 22 May 2017

    ESMA opinion on traded on a trading venue under MiFIR

     

  • 31 March 2017

    ESMA published the final report and the final draft RTS specifying the scope of the consolidated tape for non-equity financial instruments

  • 28 February 2017

    ESMA published the final report and final draft RTS on packaged orders

  • 30 June 2016

    MiFID II/MiFIR amending regulation published by the Commission (2016/1033)

  • 30 May 2016

    ESMA issued the opinion on MiFID II standards on ancillary activities (2016/730 including the Annex)

  • 2 May 2016

    ESMA issued the opinion on draft RTS 21 position limits (2016/668 including Annex)

  • 2 May 2016

    ESMA issued the opinion on draft RTS 2 non-equity transparency (2016/666 including Annex)

  • 3 January 2016

    ESMA published and sent to the Commission its third set of Technical Standards (2015/1858)

  • 28 September 2015

    ESMA published and sent to the Commission its second set of Technical Standards (2015/1464)

  • 31 August 2015

    ESMA published a Consultation Paper on draft ITS (2015/1301)

  • 29 June 2015

    ESMA published and sent to the Commission its first set of Technical Standards (2015/1006)

  • 19 December 2014

    ESMA published its Technical Advice to the Commission (2014/1569) and a Consultation Paper on draft RTS/ITS (2014/1570). With respect to the latter, an addendum has been published on 18 February 2015

  • 12 June 2014

    MiFID II/ MiFIR published in the Official Journal (MiFID II and MiFIR entered into force 20 days after publication in OJ – i.e. 2 July 2014)

  • 22 May 2014

    ESMA published one Discussion Paper (2014/548) and one Consultation Paper (2014/549) to gather views respectively on draft RTS/ITS and Technical Advice to the European Commission