MiFID II / MiFIR – New rules and new challenges
Directive 2004/39/EC on markets in financial instruments (in short MiFID and henceforth referred to as MiFID I) came into force in 2004 and is applicable since 2007. The aim of the directive was to ameliorate the competitiveness of the European Union financial market through the creation of a single market for security related services and investment activities. The ultimate target was to ensure a high level of investor protection for investors active in the EU financial market.
In the European Commission evaluation of MiFID I from 2011, several points of issue in relation to the directive were highlighted.
Reasons for a proposed recast of MiFID I include the following:
- cost advantages arising through the regulation of trading platforms were not always passed on to end investors;
- market complexity has increased through fragmentation;
- new market and technology developments, which were not foreseen at the time MiFID I was fashioned, have occurred;
- several weak-points of MiFID I have been identified in the wake of the financial crisis;
- the level of innovation and complexity of financial instruments has increased significantly.
In the recast of MiFID I the following targets where set to address points of issues identified:
- the positioning of MiFID II as an integral part of a post-crisis financial system;
- the continued implementation of the G20 agreements from Pittsburgh (25.09.2009) and the following summit regarding the regulation of OTC derivatives;
- the amelioration of transparency and supervision in the markets for commodity derivatives;
- the safeguarding of fair competition and efficient markets in relation to ever changing market structures and technological developments;
- the reduction of areas of interpretation by EU member states through uniform regulation.
Recast of MiFID I supplemented with a regulation on markets in financial instruments (MiFIR)
MiFID II entered into force on 3 July 2014 (Directive 2014/65/EU). The directive was to be transposed into national law before 3 July 2017 and is applicable from 3 January 2018. MiFID II is supplemented by a regulation on markets in financial instruments (MiFIR) (Regulation (EU) no 600/2014) that directly entered into force. MiFIR is applicable from 3 January 2018.
The goal of MiFID II and MiFIR is to increase the efficiency and transparency of financial markets, as well as to ameliorate investor protection. Moreover, supervisory authority powers are widened and clear rules of procedure are defined for all market activities.
What we can do for you
- Analysis of professional challenges and creation of comprehensive professional concepts;
- Creation of DV-concepts and the corresponding integration into your IT-environment;
- Creation of testing models and test performance;
- Implementation and integration of your IT-environment;
- Weak spot analysis;
- Impact analysis: impact of regulatory challenges on business model, organization, processes and IT-environment;
- Software evaluation;
- Feasibility studies;
- Interim management.
More information regarding MiFID II and MiFIR, for example in relation to negative interest and the calibration of market data selection for complex financial instruments, can be found under the following link (PDF-Document) or directly on the webpage of ESMA (ESMA Link) or on the general ESMA webpage for MiFID II and MiFIR.
Latest update: 31.01.2018