The texts of the long awaited update to the November 2007 Markets in Financial Instruments Directive (MiFID II) and the accompanying Markets in Financial Instruments Regulation (MiFIR) were published in June 2014. Details of the twin measures are long and complex. The discussion paper, in which the European Securities and Markets Authority (ESMA) sets out its proposals, is 533 pages long. The consultation paper, in which ESMA sets out its advice to the European Commission adds a further 311 pages. Yet it is crucial that fund managers and their service providers understand the objectives of the proposed legislation. That is because MiFID II and MiFIR aim not only to update MiFID I but to regulate and re-regulate many of the issues which European regulators believe were to blame for the great financial crisis: lack of transparency, especially in OTC derivatives; “dark pools” and other opaque trading venues; high frequency trading (HFT); and the perceived information asymmetries between financial intermediaries and investors.
Analysis of the regulation has been done to death, but the recent announcement of the postponement of the implementation of MiFID II until January 2018 has provided fresh scope for discussion.
This is in one of the popular series of ISS virtual round tables, in which we gather the thoughts of David Nowell, Head of Industry Relations and Regulatory Compliance, UnaVista, Adam De Rose, Associate Director, Product Management, Eze Software Group and Richard Frase, Partner, Financial Services and Investment Management, Dechert LLP.