User:16912 Rhiannon/MiFID II/MiFIR

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MiFID II/MiFIR[edit]

On 20 October 2011, the European Commission adopted formal proposals for a "Directive on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council" (MiFID II Directive), and for a "Regulation on markets in financial instruments (MiFIR)", which would also amend the proposed European Market Infrastructure Regulation (EMIR) on OTC derivatives, central counterparties and trade repositories.[1] MiFID II, an update to the previous MiFID law, comprises both MiFID II, a directive, and MiFIR, an accompanying regulation.[2][3] Authorisation and requirements on the conduction of business are covered under MiFID II, and increased transparency and transaction reporting requirements are covered under MiFIR.[3]

In April 2014, European Parliament officially approved MiFID II.[4] MiFID II and MiFIR entered into force on 2 July 2014 and are expected to take full effect in January 2017.[3] As of May 2015, MiFID II is still undergoing Level 2 processing.[3] ESMA is expected to release a final version of its review of MiFID II Regulatory Technical Standards (RTS) by the end of September 2015. By July 2016, E.U. Member States are expected to transpose MiFID II into national law.[3]

Changes in regulation[edit]

MiFID II both confirms and expands on requirements in the original MiFID and introduces a new position reporting requirement.[3] The regulation and directive include a set of narrowed exemptions from financial regulation. Under the previous regulation, many commodity trading firms were exempt.[5] For example, trades involving commodity derivatives, emission allowances and derivatives on emission allowances are covered under MiFID II, whereas they were exempt from MiFID I.[3] The regulations also seek to expand governmental financial regulation to a more diverse group of companies and their instruments and products.[2]

MiFID II requires regulation for commodity transactions not included within the previous MiFID, and it enforces a system called straight-through processing (STP). STP allows involved parties to stay updated in real-time on the progress of their investments.[6] Further, MiFID II establishes a trading obligation for shares and a double volume cap mechanism for shares and sets new reporting requirements for all investment companies.[2] Product governance arrangements apply to all firms who manufacture products, so that the government can determine how familiar each company leader is with her own product.[2] Also, countries inside and outside of the European Union can operate private placement regimes, with the potential for a full-EU passport over time.[7]

MiFID II includes several alterations to reporting requirements, which are intended to increase transparency in each phase of trading.[3] Under MiFID I, in trades involving more than one firm, the reporting obligation fell on both the selling and buying parties.[3] Under MiFID II, the firm attempting to sell is primarily responsible for post-trade transparency reporting, and the new regulation and directive do not allow for involved parties to delegate reporting obligations to each other.[3] Regulations regarding transaction reporting are expanded by MiFID II to include more involved parties, including portfolio managers,[3] and the reports themselves are meant to include more detail.[3] For example, the transaction report required of involved parties under MiFID II contains 81 fields of information, whereas the same form under MiFID contained 23.[3]

  1. ^ FT: Mifid amendment calls for commission ban to be scrapped 29 March 2012
  2. ^ a b c d "MiFID II – what is changing?". Financial Conduct Authority. 9 December 2014. Retrieved 27 January 2015.
  3. ^ a b c d e f g h i j k l m Jeannette Turner (28 May 2015). "MiFID II Expands MiFID I and Imposes Reporting Requirements on Asset Managers, Including Non-E.U. Asset Managers". The Hedge Fund Law Report. Retrieved 1 June 2015.
  4. ^ Elliott Holley (16 April 2014). "European Parliament passes "sensible" MiFID II". Banking Technology. Retrieved 16 April 2015.
  5. ^ Hannah Smith (19 December 2014). "ESMA unveils final guidance on MiFID II rules". Investment Week. Retrieved 16 January 2015.
  6. ^ "Consultation Paper: MiFID II" (PDF). European Securities and Market Authority. 1570: 636. 2014. Retrieved 27 January 2015.
  7. ^ Ben Mattlin (8 October 2014). "In Europe, Unbundling Proposals Spark Anxiety, Opposition". Institutional Investor. Retrieved 27 January 2015.
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