MiFID 2-MiFIR: agreement reached on legislative texts

An agreement in principle at EU level has been reached on the revised Market in Financial Instruments Directive and associated Regulation (MiFID 2/MiFIR).  Key elements of the agreed new rules include:

• the introduction of a market structure framework which closes loopholes and ensures that trading, whenever appropriate, takes place on regulated platforms.  This introduces an obligation for shares as well as for derivative instruments (which are eligible for clearing under the European Markets Infrastructure Regulation) to be traded on regulated platforms in accordance with G20 commitments;
• increased equity market transparency and establishment of a principle of transparency for non-equity instruments like bonds and derivatives.  This broadens the pre and post trade transparency regimes to include non-equity instruments and making such data available to the public;
• strengthened supervisory powers.  These provide competent authorities with the power to limit the size of a net position which may be held in commodity derivatives and introduce position reporting obligations by category of trader;
• improved conditions for competition in the trading and clearing of financial instruments.  This provides a harmonised EU regime for non-discriminatory access to trading venues and central counterparties;
• the introduction of trading controls for algorithmic trading activities;
• stronger investor protection.  This includes better organisational requirements emphasising client asset protection, product governance and strengthening the role of the management bodies of firms;
• more effective and harmonised administrative sanctions.  A harmonised system of strengthened regulatory cooperation to improve effective detection of breaches; and
• a harmonised regime for granting access to EU markets for third country firms.  This is based on an equivalence assessment of third country jurisdictions by the European Commission.

 Related link:

http://europa.eu/rapid/press-release_MEMO-14-15_en.htm