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).
We have published a user guide to help firms decide which applications and notifications they should make ahead of the implementation of MiFID II.
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.
Non-equity pre-trade transparency waivers
Following on from the information provided below, please be aware that in order for us and ESMA to process waiver applications in time for 3 January 2018, the deadline for waiver applications for bonds and derivatives to be submitted to us is 1 June 2017 at the latest.
The FCA has a limited amount of time to review and assess waiver applications before we need to submit relevant applications to ESMA by 31 July 2017. We therefore require all waiver applications to be complete and for any queries regarding the process or the proposals that applicants intend to make to be raised and discussed with us in advance of the 1 June 2017 deadline.
If applications submitted by that date are not complete, for example if the applicant needs to provide additional information or amend details after 1 June, then we cannot guarantee to process the application in time for ESMA’s 31 July deadline.
Where applicants would like to discuss particular queries, please email your relevant supervisory contact at the FCA or, if you do not have a regular supervisory contact, please send your queries to firstname.lastname@example.org.
We encourage complete waiver applications to be submitted to us in advance of the 1 June 2017 deadline where possible. Applicants should read the relevant information below and chapter 12 of the MiFID II application and notification user guide before completing their waiver application.
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.
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.
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.
- Directive 2014/65/EU on MiFID II, repealing Directive 2004/39/EC
- Regulation (EU) No 600/2014 on markets in financial instruments (MiFIR)
were published in the Official Journal of the European Union (OJEU)
The European Commission adopted the: