Technological strides and market developments since the financial crisis are now exposing 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 will require changes to the way some firms work.

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.

UK implementation

The FCA has now published two policy statements:

Policy Statement 17/5:  This covers matters from consultation papers (CP15/43), including trading venues and systematic internalisers, and (CP16/19) including organisational requirements.   It also covers a small number of issues from (CP16/29) and (CP16/43).

Policy Statement 17/14:  At 1078 pages long, this policy statement sets out the bulk of the detailed rules which firms are expected to comply with.  It includes rules on the conduct of business requirements and client assets amongst other matters and also takes into account some technical changes arising from PS17/5.  These are rules are final so firms now have clarity on a number of key areas.

Firms should also keep their eyes open for any other papers being published such as ESMA Q&As and level 3 guidance.

How can Bovill help?

Clients are drastically scaling up their MiFID II implementation projects as the 3 January 2018 deadline looms.  We’re currently helping a wide range of different firms through various types of implementation support projects.  We can help you too – check out here to see how.

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