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Esma consults on Mifid reforms
23 May 2014
Chair calls for market’s input ‘biggest overhaul’ of financial markets in a decade
The European Securities and
Markets Authority (Esma) has launched the consultation process
for the implementation of the revised Markets in Financial
Instruments Directive (Mifid II) and Regulation (Mifir).
This consultation is the
first step in the process of translating the Mifid II
requirements into practically applicable regulations. Mifid II
contains over 100 requirements for which Esma must draft
regulatory technical standards (RTS) and implementing technical
standards (ITS), and provide technical advice to the European
Commission to allow it to adopt delegated acts.
The main issues addressed in
the discussion and consultation paper are the structure,
transparency and regulation of financial markets, and
strengthening investor protection.
Steven Maijoor, Esma chair described the changes that
Mifid II would enact as "the biggest overhaul of financial
markets regulation in the EU for a decade" and "key to
restoring trust in our financial markets".
He called for input from
market participants: "We appreciate the magnitude of this
exercise for stakeholders. We strongly encourage all those
affected by these reforms to provide their views to ensure that
we take them into account in our final proposals."
Esma will hold three
public hearings about the issues around secondary markets,
investor protection and commodity derivatives on July 7 and 8.
The closing date for responses to both papers is August
Esma will publish the
Consultation Paper on Mifid II Technical Advice to be
delivered to the European Commission by December 2014 and the
Discussion Paper on Mifid II draft RTS/ITS, which will
provide the basis for a further consultation paper on the draft
of the RTS and ITS which is expected to be issued in late 2014
or early next year.
"The reform of Mifid is an
integral part of the EU's strategy to address the effects of
the financial crisis and aims to bring greater transparency to
markets and to strengthen investor protection," said
Protection of retail
investor requirements will include limiting the use of
commissions, creating conditions for the provision of
independent investment advice and product intervention
for a broader range of asset classes will include the
obligation to trade derivatives on-exchange, requirements on
algorithmic and high-frequency-trading and new supervisory
tools for commodity derivatives.
The draft regulatory
technical standards in regards to investor protection relate to
the authorisation of investment firms, passporting, and certain
best execution obligations.