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MiFID II frame

MiFID II

MiFID II will have a significant impact on financial institutions providing services in the EU. Hogan Lovells has created this site to help firms understand what will change under MiFID II, and how those changes may affect their business.

MiFID II texts

MiFID II texts

Since the European Commission published its review of MiFID in 2010, there has been a steady stream of texts issued by the European institutions on MiFID II.

In this section, we set out links to some of the main EU texts relating to the adoption and implementation of MiFID II.  These texts are referred to in our briefing notes on this microsite.

The MiFID II Directive and MiFIR

The main texts are the MiFID II Directive (see here) and the accompanying Markets in Financial Instruments Regulation ("MiFIR") (see here).  The Directive and MiFIR were both published in the Official Journal of the European Union on the same day (12 June 2014).  

Obvious errors in the definitions of "competent authority" and "structured deposit" were corrected in corrigenda to the text in July 2016 (see here and here). Further minor corrigenda to the text of the MiFID II Directive were published on 10 March 2017 (see here).

Timing

It was originally intended that most of the MiFID II provisions would become effective on 3 January 2017.  However, this has now been delayed by one year, so that the legislation will become effective by 3 January 2018.  This was confirmed by the publication on 30 June 2016 of a Directive and a Regulation (see here) to extend the application date of the MiFID II Directive and MiFIR by one year. The deadline for member states to transpose the MiFID II Directive into national law was extended to 3 July 2017.  This legislation also contains some limited substantive amendments to MiFID II. 

MiFID II Delegated Acts

The European Securities and Markets Authority ("ESMA") published a Consultation Paper dated 22 May 2014 (see here) which contained most of its proposals in relation to investor protection issues.  These topics were intended to be adopted in the form of delegated acts in secondary legislation.

This was followed by ESMA's Technical Advice to the Commission on the same topics on 19 December 2014 (see here).  

The Commission has used ESMA's Technical Advice as the basis for the following MiFID II delegated acts:

  • the MIFID II Delegated Directive of 7 April 2016 (see here

  • the MIFID II Delegated Regulation of 25 April 2016 (see here) and Annex (see here

  • the MiFIR Delegated Regulation of 18 May 2016 (see here) and Annex 

MiFID II Technical Standards

ESMA was tasked with preparing draft technical standards in relation to specific MiFID II topics.  ESMA published these draft technical standards in order for the Commission to consider them when adopting secondary legislation to implement the MiFID II Directive and MiFIR.

ESMA proposals

ESMA published a Discussion Paper dated 22 May 2014 (see here).  The Discussion Paper contained the more innovative and technically complex issues in MiFID II, such as transparency, data reporting and market structure, as well as a limited number of investor protection provisions. This discussion paper was followed by a further Consultation Paper on 19 December 2014 (see here) on these topics, together with draft regulatory technical standards (see here).   ESMA subsequently published an addendum consultation paper on 18 February 2015 (see here) on technical standards under MiFIR relating to transparency requirements for non-equity financial instruments.  

This was then followed by ESMA's publication on 30 June 2015 of most of the relevant draft technical standards (see here) on investor protection. In particular, these draft technical standards related to authorisation, passporting, non-EEA firms, and co-operation between regulators. On 31 August 2015, ESMA issued its final consultation paper (see here), containing draft implementing technical standards in relation to the suspension and removal of financial instruments from trading, information requirements for data reporting services providers, and position reporting.

On 28 September 2015, ESMA issued further draft technical standards (see here) and a final report (see here).  

On 11 December 2015, ESMA published a further release of eight draft technical standards (see here), mostly relating to templates for standard forms required under MiFID II.

On 20 September 2016, ESMA issued a discussion paper on the trading obligation for derivatives (see here).

On 3 October 2016, ESMA issued a consultation paper on a draft RTS on the scope of the non-equity consolidated tape (see here).

On 10 November 2016, ESMA published a consultation paper on a draft RTS on the transparency waiver applicable to certain package orders (see here).

Commission proposals

During the summer of 2016, the European Commission adopted draft Delegated Regulations based on the ESMA proposals.  The Delegated Regulations set out the detailed requirements that will apply under MiFID II. 

  • RTS 1: transparency requirements for trading venues and investment firms in respect of shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser (14 July 2016) (see here) and Annex (see here)

  • RTS 2: transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives (14 July 2016) (see here) and Annex (see here)

  • RTS 3: the volume cap mechanism and the provision of information for the purposes of transparency and other calculations (13 June 2016) (see here) and Annex (see here)

  • RTS 4: criteria for determining whether derivatives subject to the clearing obligation should be subject to the trading obligation (published in the Official Journal 19 November 2016)  (see here

  • RTS 5: the direct, substantial and foreseeable effect of derivative contracts within the EU and the prevention of the evasion of rules and obligations (13 June 2016) (see here)

  • RTS 6: organisational requirements of investment firms engaged in algorithmic trading (19 July 2016) (see here) and Annex (see here)

  • RTS 7: organisational requirements of trading venues (14 July 2016) (see here) and Annex (see here)

  • RTS 8: requirements for market making agreements and schemes (13 June 2016) (see here)

  • RTS 9: ratio of unexecuted orders to transactions in order to prevent disorderly trading conditions (18 May 2016) (see here) and Annex (see here)

  • RTS 10: requirements to ensure fair and non-discriminatory co-location services and fee structures (6 June 2016) (see here)

  • RTS 11: tick size regime for shares, depositary receipts and exchange traded funds (14 July 2016) (see here) and Annex (see here)

  • RTS 12: determination of a material market in terms of liquidity in relation to notifications of a temporary halt in trading (see here

  • RTS 13: authorisation, organisational requirements and the publication of transactions for data reporting services providers (2 June 2016) (see here)

  • RTS 14: specification of the offering of pre-and post-trade data and the level of disaggregation of data (2 June 2016) (see here)

  • RTS 15: clearing access in respect of trading venues and central counterparties (24 June 2016) (see here) and Annex (see here)

  • RTS 16: access in respect of benchmarks (published in the Official Journal on 19 November 2016) (see here)

  • RTS 17: admission of financial instruments to trading on regulated markets (24 May 2016) (see here)

  • RTS 18: suspension and removal of financial instruments from trading (24 May 2016) (see here)

  • ITS 19: functioning of MTFs and OTFs (published in the Official Journal 26 May 2016) (see here)

  • RTS 20: criteria to establish when an activity is ancillary to the main business (1 December 2016) (see here)

  • RTS 21: application of position limits to commodity derivatives (1 December 2016) (see here)

  • RTS 22: reporting of transactions to competent authorities (28 July 2016) (see here) and Annex (see here)

  • RTS 23: data standards and formats for financial instrument reference data (14 July 2016) (see here) and Annex (see here)

  • RTS 24: maintenance of relevant data relating to orders in financial instruments (24 June 2016) (see here) and Annex (see here)

  • RTS 25: level of accuracy of business clocks in trade reporting (7 June 2016) (see here) and Annex (see here)

  • RTS 26: obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing (24 June 2016) (see here)

  • RTS 27: data to be published by execution venues on the quality of execution of transactions (8 June 2016) (see here) and Annex (see here)

  • RTS 28: annual publication by investment firms of information on the identity of execution venues and on the quality of execution (8 June 2016) (see here) and Annex (see here)

  • RTS: information to be notified by investment firms, market operators and credit institutions (passporting) (29 June 2016) (see here)

  • RTS: exchange of information between competent authorities (14 July 2016) (see here)

  • RTS: information and requirements for the authorisation of investment firms (14 July 2016) (see here)

  • RTS: information for registration of third-country firms and the format of information to be provided to the clients (published in the Official Journal on 19 November 2016) (see here).

MiFID II Guidelines 

ESMA has published Guidelines on the following topics:

  • complex debt instruments and structured deposits: consultation on draft guidelines (24 March 2015) (see here) and final guidelines (26 November 2015) (see here)
  • assessment of knowledge and competence in investment advisers: consultation on draft guidelines (23 April 2015) (see here) and final guidelines (17 December 2015) (see here)
  • cross-selling: consultation on draft guidelines by the ESAs (22 December 2014) (see here) and final guidelines (22 December 2015) (see here)
  • transaction reporting, reference data, order record keeping and clock synchronisation: consultation on draft guidelines (23 December 2015) (see here) and final guidelines (see here) with a final report (see here) (10 October 2016)
  • product governance: consultation on draft guidelines (5 October 2016) (see here)
  • requirements for the management boards of trading venues and data reporting service providers: consultation on draft guidelines (see here) (5 October 2016)
  • calibration, publication and reporting of trading halts:consultation on draft guidelines (see here) (6 October 2016)

MiFID II Q&A

ESMA has published Q&A on the following topics, which are updated by ESMA on a rolling basis. The date noted below is the date of the latest update:

  • the double volume cap (3 October 2016) (see here).
  • investor protection (16 December 2016) (see here). The Q&A cover best execution, the recording of telephone conversations and electronic communications, record keeping, investment advice on an independent basis, underwriting and placement of financial instruments, and inducements (research).
  • transparency (31 January 2017) (see here).
  • commodity derivatives (19 December 2016) (see here).
  • market structures (31 January 2017) (see here).
  • MiFIR data reporting (20 December 2016) (see here). The Q&A cover the legal entity identifier (LEI) and the data and time of the request for admission and admission.

MiFIR technical reporting requirements and templates

ESMA has issued technical reporting requirements in relation to data for transaction reporting, transparency, financial instrument references, and the double volume cap. These are summarised in ESMA's briefing note (see here.)

  • About MiFID II
  • Algorithmic and high-frequency trading
  • Commodity derivatives
  • Data reporting services
  • Derivatives
  • Investor protection
  • Transaction reporting
  • Market infrastructure, trading venues and CCPs
  • Member state implementation
  • MiFID II texts

    MiFID II texts

    MiFID II texts

    Since the European Commission published its review of MiFID in 2010, there has been a steady stream of texts issued by the European institutions on MiFID II.

    In this section, we set out links to some of the main EU texts relating to the adoption and implementation of MiFID II.  These texts are referred to in our briefing notes on this microsite.

    The MiFID II Directive and MiFIR

    The main texts are the MiFID II Directive (see here) and the accompanying Markets in Financial Instruments Regulation ("MiFIR") (see here).  The Directive and MiFIR were both published in the Official Journal of the European Union on the same day (12 June 2014).  

    Obvious errors in the definitions of "competent authority" and "structured deposit" were corrected in corrigenda to the text in July 2016 (see here and here). Further minor corrigenda to the text of the MiFID II Directive were published on 10 March 2017 (see here).

    Timing

    It was originally intended that most of the MiFID II provisions would become effective on 3 January 2017.  However, this has now been delayed by one year, so that the legislation will become effective by 3 January 2018.  This was confirmed by the publication on 30 June 2016 of a Directive and a Regulation (see here) to extend the application date of the MiFID II Directive and MiFIR by one year. The deadline for member states to transpose the MiFID II Directive into national law was extended to 3 July 2017.  This legislation also contains some limited substantive amendments to MiFID II. 

    MiFID II Delegated Acts

    The European Securities and Markets Authority ("ESMA") published a Consultation Paper dated 22 May 2014 (see here) which contained most of its proposals in relation to investor protection issues.  These topics were intended to be adopted in the form of delegated acts in secondary legislation.

    This was followed by ESMA's Technical Advice to the Commission on the same topics on 19 December 2014 (see here).  

    The Commission has used ESMA's Technical Advice as the basis for the following MiFID II delegated acts:

    • the MIFID II Delegated Directive of 7 April 2016 (see here

    • the MIFID II Delegated Regulation of 25 April 2016 (see here) and Annex (see here

    • the MiFIR Delegated Regulation of 18 May 2016 (see here) and Annex 

    MiFID II Technical Standards

    ESMA was tasked with preparing draft technical standards in relation to specific MiFID II topics.  ESMA published these draft technical standards in order for the Commission to consider them when adopting secondary legislation to implement the MiFID II Directive and MiFIR.

    ESMA proposals

    ESMA published a Discussion Paper dated 22 May 2014 (see here).  The Discussion Paper contained the more innovative and technically complex issues in MiFID II, such as transparency, data reporting and market structure, as well as a limited number of investor protection provisions. This discussion paper was followed by a further Consultation Paper on 19 December 2014 (see here) on these topics, together with draft regulatory technical standards (see here).   ESMA subsequently published an addendum consultation paper on 18 February 2015 (see here) on technical standards under MiFIR relating to transparency requirements for non-equity financial instruments.  

    This was then followed by ESMA's publication on 30 June 2015 of most of the relevant draft technical standards (see here) on investor protection. In particular, these draft technical standards related to authorisation, passporting, non-EEA firms, and co-operation between regulators. On 31 August 2015, ESMA issued its final consultation paper (see here), containing draft implementing technical standards in relation to the suspension and removal of financial instruments from trading, information requirements for data reporting services providers, and position reporting.

    On 28 September 2015, ESMA issued further draft technical standards (see here) and a final report (see here).  

    On 11 December 2015, ESMA published a further release of eight draft technical standards (see here), mostly relating to templates for standard forms required under MiFID II.

    On 20 September 2016, ESMA issued a discussion paper on the trading obligation for derivatives (see here).

    On 3 October 2016, ESMA issued a consultation paper on a draft RTS on the scope of the non-equity consolidated tape (see here).

    On 10 November 2016, ESMA published a consultation paper on a draft RTS on the transparency waiver applicable to certain package orders (see here).

    Commission proposals

    During the summer of 2016, the European Commission adopted draft Delegated Regulations based on the ESMA proposals.  The Delegated Regulations set out the detailed requirements that will apply under MiFID II. 

    • RTS 1: transparency requirements for trading venues and investment firms in respect of shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments and on transaction execution obligations in respect of certain shares on a trading venue or by a systematic internaliser (14 July 2016) (see here) and Annex (see here)

    • RTS 2: transparency requirements for trading venues and investment firms in respect of bonds, structured finance products, emission allowances and derivatives (14 July 2016) (see here) and Annex (see here)

    • RTS 3: the volume cap mechanism and the provision of information for the purposes of transparency and other calculations (13 June 2016) (see here) and Annex (see here)

    • RTS 4: criteria for determining whether derivatives subject to the clearing obligation should be subject to the trading obligation (published in the Official Journal 19 November 2016)  (see here

    • RTS 5: the direct, substantial and foreseeable effect of derivative contracts within the EU and the prevention of the evasion of rules and obligations (13 June 2016) (see here)

    • RTS 6: organisational requirements of investment firms engaged in algorithmic trading (19 July 2016) (see here) and Annex (see here)

    • RTS 7: organisational requirements of trading venues (14 July 2016) (see here) and Annex (see here)

    • RTS 8: requirements for market making agreements and schemes (13 June 2016) (see here)

    • RTS 9: ratio of unexecuted orders to transactions in order to prevent disorderly trading conditions (18 May 2016) (see here) and Annex (see here)

    • RTS 10: requirements to ensure fair and non-discriminatory co-location services and fee structures (6 June 2016) (see here)

    • RTS 11: tick size regime for shares, depositary receipts and exchange traded funds (14 July 2016) (see here) and Annex (see here)

    • RTS 12: determination of a material market in terms of liquidity in relation to notifications of a temporary halt in trading (see here

    • RTS 13: authorisation, organisational requirements and the publication of transactions for data reporting services providers (2 June 2016) (see here)

    • RTS 14: specification of the offering of pre-and post-trade data and the level of disaggregation of data (2 June 2016) (see here)

    • RTS 15: clearing access in respect of trading venues and central counterparties (24 June 2016) (see here) and Annex (see here)

    • RTS 16: access in respect of benchmarks (published in the Official Journal on 19 November 2016) (see here)

    • RTS 17: admission of financial instruments to trading on regulated markets (24 May 2016) (see here)

    • RTS 18: suspension and removal of financial instruments from trading (24 May 2016) (see here)

    • ITS 19: functioning of MTFs and OTFs (published in the Official Journal 26 May 2016) (see here)

    • RTS 20: criteria to establish when an activity is ancillary to the main business (1 December 2016) (see here)

    • RTS 21: application of position limits to commodity derivatives (1 December 2016) (see here)

    • RTS 22: reporting of transactions to competent authorities (28 July 2016) (see here) and Annex (see here)

    • RTS 23: data standards and formats for financial instrument reference data (14 July 2016) (see here) and Annex (see here)

    • RTS 24: maintenance of relevant data relating to orders in financial instruments (24 June 2016) (see here) and Annex (see here)

    • RTS 25: level of accuracy of business clocks in trade reporting (7 June 2016) (see here) and Annex (see here)

    • RTS 26: obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing (24 June 2016) (see here)

    • RTS 27: data to be published by execution venues on the quality of execution of transactions (8 June 2016) (see here) and Annex (see here)

    • RTS 28: annual publication by investment firms of information on the identity of execution venues and on the quality of execution (8 June 2016) (see here) and Annex (see here)

    • RTS: information to be notified by investment firms, market operators and credit institutions (passporting) (29 June 2016) (see here)

    • RTS: exchange of information between competent authorities (14 July 2016) (see here)

    • RTS: information and requirements for the authorisation of investment firms (14 July 2016) (see here)

    • RTS: information for registration of third-country firms and the format of information to be provided to the clients (published in the Official Journal on 19 November 2016) (see here).

    MiFID II Guidelines 

    ESMA has published Guidelines on the following topics:

    • complex debt instruments and structured deposits: consultation on draft guidelines (24 March 2015) (see here) and final guidelines (26 November 2015) (see here)
    • assessment of knowledge and competence in investment advisers: consultation on draft guidelines (23 April 2015) (see here) and final guidelines (17 December 2015) (see here)
    • cross-selling: consultation on draft guidelines by the ESAs (22 December 2014) (see here) and final guidelines (22 December 2015) (see here)
    • transaction reporting, reference data, order record keeping and clock synchronisation: consultation on draft guidelines (23 December 2015) (see here) and final guidelines (see here) with a final report (see here) (10 October 2016)
    • product governance: consultation on draft guidelines (5 October 2016) (see here)
    • requirements for the management boards of trading venues and data reporting service providers: consultation on draft guidelines (see here) (5 October 2016)
    • calibration, publication and reporting of trading halts:consultation on draft guidelines (see here) (6 October 2016)

    MiFID II Q&A

    ESMA has published Q&A on the following topics, which are updated by ESMA on a rolling basis. The date noted below is the date of the latest update:

    • the double volume cap (3 October 2016) (see here).
    • investor protection (16 December 2016) (see here). The Q&A cover best execution, the recording of telephone conversations and electronic communications, record keeping, investment advice on an independent basis, underwriting and placement of financial instruments, and inducements (research).
    • transparency (31 January 2017) (see here).
    • commodity derivatives (19 December 2016) (see here).
    • market structures (31 January 2017) (see here).
    • MiFIR data reporting (20 December 2016) (see here). The Q&A cover the legal entity identifier (LEI) and the data and time of the request for admission and admission.

    MiFIR technical reporting requirements and templates

    ESMA has issued technical reporting requirements in relation to data for transaction reporting, transparency, financial instrument references, and the double volume cap. These are summarised in ESMA's briefing note (see here.)

  • Pre- and post-trade transparency
  • Third country access

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