MEPs pass transformational legislations
Members of European Parliament (MEPs) voted in a set of new financial market laws on April 15 ahead of the forthcoming parliamentary elections.
The legislations included Ucits V, the Markets in Financial Instruments Directive II (MiFID II), the Central Securities Depositories Regulation (CSDR), as well as rules on algorithmic trading.
Market participants were relieved that European politicians adopted the regulations before the May 15 elections.
Paul Stratford, director in wealth and asset management, Emeia, EY, said asset managers would have felt respite following the adoption of Ucits V: “There has been considerable political debate about the Ucits V, not least about remuneration, and an influx of new MEPs could have risked a time-consuming re-run of the debate. Now at least Managers know what they have to grapple with.”
He said that although most managers will not start impact assessments for Ucits V until Q1 2015, firms might need to start making changes.
“We expect Ucits V will now start to impact Alternative Investment Fund Managers (AIFM) directive workstreams as firms seek to future proof the work they're doing on areas where there are crossover.”
He added: “The introduction of a consistent sanctions and whistleblower regime across Europe shouldn't be underestimated. It should have a significant impact on the industry, reducing regulatory arbitrage and ensuring more consistency of behaviour across the industry, incentivised by the fairly sizeable 'stick' of a 15m euro fine."
The European Securities and Markets Authority (Esma) now has a huge task to draw up technical guidance on implementing Ucits V.
MEPs voted on rules for CSDs in order to ensure the entire trading process is regulated, as well as introducing higher safety and efficiency in securities settlement across the region.
The measures include shorter settlement times, mandatory cash penalties and buy-ins for settlement fails, and strict business rules for CSDs. The next step is for the European Council to formally adopt CSDR. The parliamentary vote is good news for CSDs and their users given that the Target2-Securities initiative will start to come into place next year.
Parliament also introduced the EU’s first rules on high-frequency trading (HFT). Investment firms will be expected to have effective systems and controls in place such as circuit breakers to stop trading if price volatility rises too much.
Regulatory-authorised venues will test the algorithms to minimise systemic risk.
MiFID II will now need to be approved by the European Council.
The legislations included Ucits V, the Markets in Financial Instruments Directive II (MiFID II), the Central Securities Depositories Regulation (CSDR), as well as rules on algorithmic trading.
Market participants were relieved that European politicians adopted the regulations before the May 15 elections.
Paul Stratford, director in wealth and asset management, Emeia, EY, said asset managers would have felt respite following the adoption of Ucits V: “There has been considerable political debate about the Ucits V, not least about remuneration, and an influx of new MEPs could have risked a time-consuming re-run of the debate. Now at least Managers know what they have to grapple with.”
He said that although most managers will not start impact assessments for Ucits V until Q1 2015, firms might need to start making changes.
“We expect Ucits V will now start to impact Alternative Investment Fund Managers (AIFM) directive workstreams as firms seek to future proof the work they're doing on areas where there are crossover.”
He added: “The introduction of a consistent sanctions and whistleblower regime across Europe shouldn't be underestimated. It should have a significant impact on the industry, reducing regulatory arbitrage and ensuring more consistency of behaviour across the industry, incentivised by the fairly sizeable 'stick' of a 15m euro fine."
The European Securities and Markets Authority (Esma) now has a huge task to draw up technical guidance on implementing Ucits V.
MEPs voted on rules for CSDs in order to ensure the entire trading process is regulated, as well as introducing higher safety and efficiency in securities settlement across the region.
The measures include shorter settlement times, mandatory cash penalties and buy-ins for settlement fails, and strict business rules for CSDs. The next step is for the European Council to formally adopt CSDR. The parliamentary vote is good news for CSDs and their users given that the Target2-Securities initiative will start to come into place next year.
Parliament also introduced the EU’s first rules on high-frequency trading (HFT). Investment firms will be expected to have effective systems and controls in place such as circuit breakers to stop trading if price volatility rises too much.
Regulatory-authorised venues will test the algorithms to minimise systemic risk.
MiFID II will now need to be approved by the European Council.
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