The European Commission finally published its legislative proposals to revise the Markets in Financial Instruments Directive (MiFID) on 20 October, nearly 4 years after the MiFID implementation date of 1 November 2007. The proposed changes to MiFID will result in a significant overhaul of the way in which financial markets operate in Europe.
The proposed legislation is divided in two: a new Directive and a new Regulation:
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MiFID Level 1 Directive (2004/39/EC) will be recast, with a new directive amending the following provisions:
- Specific requirements regarding the provision of investment services
- Scope of exemptions from the current Directive
- Organisational and conduct of business requirements for investment firms
- Organisational requirements for trading venues
- Authorisation and on-going obligations applicable to providers of data services
- Powers available to competent authorities
- Sanctions
- Rules applicable to third-country firms operating via a branch
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Regulation on the Markets in Financial Instruments (MiFIR), which establishes uniform and directly applicable requirements in relation to:
- Disclosure of trade transparency data to the public and transaction data to competent authorities
- Removing barriers to non-discriminatory access to clearing facilities
- Mandatory trading of derivatives on organised venues
- Specific supervisory actions regarding financial instruments and positions in derivatives
- Provision of services by third-country firms without a branch
The Commission’s legislative proposals to amend MiFID follow the preparatory work of the Committee of European Securities Regulators (replaced by the European Securities and Markets Authority (ESMA) in January 2011) and the Commission in 2010, including the Commission's consultation paper on the review of MiFID in December 2010.
In addition to the draft Directive and Regulation, the Commission has published summary and full impact assessments, Frequently Asked Questions on the proposals and Frequently Asked Questions on Emissions Allowances. A summary of the Commission’s proposals is set out here. The highlights below also link to the relevant sections of the summary.
Indicative timetable
March/April 2012
- European Parliament potentially adopts its position at a first reading vote
June/July 2012
- (If European Parliament and European Council do not reach agreement at the first reading stage) Second reading vote to take place 3 to 4 months after first reading
Mid/End 2012
- MiFID Directive to enter into force 20 days after publication in the Official Journal of the European Union (“Official Journal”)
- MiFIR to enter into force the day following its publication in the Official Journal
- Some MiFIR provisions applicable immediately after MiFIR enters into force
Mid/End 2014
- MiFID Directive to be implemented, and the remainder of MiFIR to be directly applicable, in Member States 2 years after MiFID Directive and MiFIR come into force
2016
- ESMA to submit draft technical standards to the Commission
- Transitional arrangements for existing third country firms to end 4 years after MiFID Directive and MiFIR come into force
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