A final revised Markets in Financial Instruments Directive and Regulation (MiFID II) was published in the EU Official Journal on the 12th June 2014. Most of the requirements in MiFID II will be fully implemented in January 2018 due to the proposed delay from the European Commission. Broadly speaking, MiFID II represents two major changes compared to the existing MiFID framework:
- An overhaul of the existing MiFID I rules regarding Equities
- An extension of the scope to include non-Equities, such as bonds and derivatives
The requirements in MiFID II are divided into a regulation (MiFIR) and directive (MiFID). The regulation will be implemented at the same time and applying the same rules across the EU, while each EU country has some discretion in the implementation of the directive. The main requirements included in each of the two are outlined below.
- Investor protection (e.g. a definition of independent and dependent advice, a ban on inducements and product governance)
- Provision of market data and data consolidation (including a single consolidated tape for Equities in the EU)
- Authorisation and operating conditions for investments firms
- Rules for Algorithmic and High-Frequency trading
- Rules for commodity derivatives
- Introduction of a new trading venue, Organised Trading Facility (OTF)
- Transparency requirements for trading venues, Systematic Internaliser and trading OTC (Pre-trade transparency and Post-trade transparency), requiring public disclosure of trades executed and transaction reporting to authorities
- An obligation for derivatives to be traded on trading venues (MTF, OTF, Regulated Market)
- Open access to trading venues and CCPs, and CCP interoperability
- Product intervention powers for supervisory authorities
- Rules for the treatment of entities from 3rd countries operating in the EU
On February 10 2016 the European Commission proposed a one year extension to the application date of MiFID II. The proposal is now subject to the usual approval by the EU Parliament and Council before finalisation. The proposed new start date for the whole package will be 3 January 2018.
The Commission is finalising the detailed rules, Delegated Acts and regulatory technical standards.
MiFID II supervisors
MiFID II regulation