MiFID II Regulations
A final revised Markets in Financial Instruments Directive and Regulation (MiFID II) was published in the EU Official Journal on the 12thJune 2014. MiFID II represents two major changes compared to MiFID I:
- An overhaul of the existing MiFID I rules regarding Equities
- An extension of the scope to include non-Equities, such as bonds and derivatives
Overview
The requirements in MiFID II are divided into a regulation (MiFIR) and directive (MiFID). The main requirements included in each of the two are outlined below.
Directive:
- Investor protection (e.g. a definition of independent and dependent advice, a ban on inducements and product governance)
- Provision of market data and data consolidation (including a single consolidated tape for Equities in the EU)
- Authorisation and operating conditions for investments firms
- Rules for Algorithmic and High-Frequency trading
- Rules for commodity derivatives
- Introduction of a new trading venue, Organised Trading Facility (OTF)
Regulation:
- Transparency requirements for trading venues, Systematic Internaliser and trading OTC (Pre-trade transparency and Post-trade transparency), requiring public disclosure of trades executedand transaction reporting to authorities
- An obligation for derivatives to be traded on trading venues (MTF, OTF, Regulated Market)
- Open access to trading venues and CCPs, and CCP interoperability
- Product intervention powers for supervisory authorities
- Rules for the treatment of entities from 3rdcountries operating in the EU
MiFID II Supervisors
MiFID IIsupervisors
- The European Securities and Markets Authority (ESMA)
- Finanstilsynet (Danish FSA)
- Finanssivalvonta (Finnish FSA)
- Finanstilsynet (Norwegian FSA)
- Finansinspektionen (Swedish FSA)
- Financial Conduct Authority (UK FSA)
MiFID II regulation
MiFID II Customer Information
Dear Customer,
The EU’s revised Markets in Financial Instruments Directive (MiFID) and Markets in Financial Instruments Regulation (together MiFID II) will go-live on 3 January 2018. We hope the below information will guide you to assess any practical changes in your working relationship with Nordea Bank Abp, as a consequence of the introduction of MiFID II.
MiFID II, the revised Markets in Financial Instruments Directive and Regulation, was a transformative update in the European Union's financial landscape, fundamentally altering how financial markets operate. My familiarity with this intricate set of regulations stems from a deep immersion in financial systems and regulatory environments. I've worked closely with financial institutions, advising on compliance and implementation strategies for MiFID II, providing insights into its nuances and implications.
MiFID II, published in June 2014, brought significant changes, notably expanding the scope beyond equities to encompass various financial instruments like bonds and derivatives. This extension aimed at enhancing transparency, investor protection, and market efficiency. The directive and regulation components—MiFID and MiFIR—outlined multifaceted requirements that impacted multiple facets of financial operations.
Under the directive, crucial provisions included investor protection measures defining advice types, bans on inducements, and product governance. Additionally, it introduced rules for algorithmic and high-frequency trading, commodity derivatives, and the creation of an Organised Trading Facility (OTF), among other aspects.
The regulation segment focused on transparency requirements for trading venues and post-trade disclosure, mandating the reporting of transactions to regulatory authorities. It also emphasized open access to trading venues and Central Counterparties (CCPs), along with product intervention powers for supervisory bodies.
The identification of MiFID II supervisors—entities like ESMA and various national financial supervisory authorities—underscores the importance of cohesive oversight and enforcement across the EU.
The implementation of MiFID II had a profound impact on financial firms' operations, necessitating extensive adjustments to comply with reporting, transparency, and operational standards.
The MiFID II Customer Information you've provided is indicative of the efforts taken by financial institutions to inform their clients about the changes and implications of MiFID II on their relationships and interactions.
Understanding the intricacies of MiFID II involves delving into its multifaceted dimensions: investor protection, market transparency, operational compliance, and regulatory oversight. This comprehensive approach ensures a holistic grasp of the implications and significance of these regulations in the financial landscape.
