Technological strides and market developments since the financial crisis exposed weaknesses in the original MiFID. MiFID II is a complete rebuild. At over 213 pages (MiFID I was 44), MiFID II is longer, broader and more granular. It increases requirements, brings new firms into scope, and requires changes to the way some firms work.  Whilst it has come into effect, many important technical elements and guidance are still being finalised.

The new framework aims to make financial markets more efficient, resilient and transparent.

  • It introduces a market structure which closes loopholes and ensures that trading, wherever appropriate, takes place on regulated platforms
  • It takes into account technological developments since MiFID I – introduces rules on high frequency trading and algorithmic trading
  • It improves the transparency and oversight of financial markets – equity and non-equity
  • It addresses the issue of excessive price volatility in commodity derivatives markets
  • The new framework also increases the role and supervisory powers of regulators
  • Building on the rules already in place, the revised MiFID also strengthens the protection of investors by introducing robust organisational and conduct requirements or by strengthening the role of management bodies
  • A harmonised regime for granting access to EU professional markets for firms from third countries, based on an equivalence assessment of third country jurisdictions by the Commission, is introduced.

Latest

In the early weeks of MiFID II’s operation, ESMA published:

  • a general release drawing attention to the MiFID II/MiFIR data now available via its website – lists/ registers of investment firms, trading venues, systematic internalisers, data reporting service providers, contracts with position limits, position reports for commodity derivatives etc.;
  • a first batch of information on the position management controls being applied by parties operating trading venues that trade commodity derivative contracts;
  • a register clarifying the application of the trading obligation, i.e. classes of derivatives covered, trading venues on which trading can take place and when the trading obligation takes effect;
  • a list of trading venues permitted to temporarily opt-out from the open access provisions of MiFIR Article 36 in relation to exchange-traded derivatives (as per ICE and LME above); and
  • its decision to delay the publication of data on the double volume cap mechanism for January 2018, made on the basis that insufficient information received from trading venues would only enable it to provide “a biased picture covering only a very limited number of instruments and markets”.

How can Bovill help?

Many firms are now treating MiFID II as business as usual although, given the complexity and uncertainty around certain aspects of the legislation, some firms are still finalising  elements of their projects and are about to operate some processes for the first time.  We can help you with advise on MiFID or a MiFID II healthcheck, just get in touch.  See here for more.

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