MiFID II

The Markets in Financial Instruments Directive is the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded.

The Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for:

  • investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as ‘financial instruments’) and
  • the organised trading of financial instruments

MiFID was applied in the UK from November 2007, but is now being revised to improve the functioning of financial markets in light of the financial crisis and to strengthen investor protection.

The changes are currently set to take effect from 3 January 2018, with the new legislation being known as MiFID II - this includes a revised MiFID and a new Markets in Financial Instruments Regulation (MiFIR).

MiFID II - application and notification user guide

We have published a user guide to help firms decide which applications and notifications they should make ahead of the implementation of MiFID II.

Planning

Firms will need to start planning for the MiFID II changes ahead of the finalisation of the EU implementing legislation and the subsequent changes that we and the PRA make to our Handbooks, and changes that HM Treasury makes to financial services legislation.

MiFID II is a wide-ranging piece of legislation and, depending on your business model, could affect a wide range of your firm’s functions – from trading, transaction reporting and client services to IT and HR systems.

Pre-trade transparency waivers

On 19 December 2016 ESMA published Q&A on the process of how it delivers opinions to national competent authorities on pre-trade transparency waivers. In light of this we have written to UK operators of trading venues (PDF) attaching a draft form (DOC). This letter is relevant to anyone who seeks to operate a UK trading venue under MiFID II.

EBA review of the prudential framework for MiFID investment firms

Data collection for commodity derivatives firms

The EBA has issued a data request to support their response to the European Commission's Call for Advice on a new prudential framework for investment firms. This is relevant to commodity derivatives firms that are, or expect to be, prudentially regulated by us as a result of MiFID.

We encourage commodity derivative firms to take this opportunity to contribute towards a more appropriate prudential regime for their firms. Completed templates should be emailed to: InvestmentFirmEBADataCollection@fca.org.uk by Monday 20 February 2017.

See the EBA's website for full details and templates.

EBA discussion paper

A recent EBA discussion paper sets out a possible new, bespoke prudential regime for MiFID investment firms, which is quite different from the current regime under the CRD/CRR. On 17 January, we hosted an event to talk through the EBA discussion paper and explain the thinking behind the proposals and give firms the opportunity to ask questions.

Watch a recording of the event (registration required).

The EBA's consultation closes on 2 February 2017.

Any other investment firms that have not submitted data to the EBA can still do so to the same email address. More information is available from the EBA.

Texts

2014

were published in the Official Journal of the European Union (OJEU)

2016

The European Commission adopted the: