Transcript MIFID - Central Bank of Ireland

Markets in Financial Instruments Directive & Regulation (MiFID II / MiFIR)
Proposals for modifying MiFID in the form of
a Regulation and Directive
Directive &
Regulation
Political Agreement
Entry into force
Oct 2011
January 2014
July 2014
Latest News
The Directive on Markets in Financial Instruments repealing Directive 2004/39/EC
(MiFID II) and the Regulation on Markets in Financial Instruments (MiFIR) were
published in the Official Journal of the EU in June 2014. Member States have two years
to transpose the new rules which will be applicable starting January 2017. The new
framework aims to make financial markets more efficient, resilient and transparent. It
introduces a market structure which closes loopholes and ensures that trading,
wherever appropriate, takes place on regulated platforms. It introduces rules on high
frequency trading. It improves the transparency and oversight of financial markets –
including derivatives markets - and addresses the issue of excessive price volatility in
commodity derivatives markets.
In Q2, 2014, the European Commission sent a mandate to EBA and ESMA for advice on
possible delegated acts concerning the Markets in Financial Instruments Directive and
Regulation (MiFID 2). A response is due by the end of the year.
Overview
In October 2011, the European Commission published a
proposal for a revision of the Markets in Financial Instruments
Directive (MiFID2) and a new Markets in Financial Instruments
Regulation (MiFIR). MiFID2 and MiFIR review the Markets in
Financial Instruments Directive 2004/39/EC (MiFID). The
impetus for the review originates from in-built review clauses
in MiFID, as a response to the financial crisis and also the G20
objective set in 2009 that “all standardised OTC derivatives
contracts be traded on exchanges or electronic trading
platforms, where appropriate”. Key elements of the agreed text
include;
• market structure framework, which ensures trading takes
place on regulated platforms.
• increases equity market transparency and establishes a
principle of transparency for non-equity instruments such
as bonds and derivatives.
• rules have been enhanced to ensure the effective
consolidation and disclosure of trading data
• strengthened supervisory powers and a harmonised
position-limits regime for commodity derivatives
• trading controls for algorithmic trading activities which
increase the speed of trading and can cause systemic risks.
• stronger investor protection is achieved by introducing
better organisational requirements, such as client asset
protection or product governance, which also strengthen
the role of management bodies.