Leap to MIFID II – Vol 3, Issue 3: November 2017

Acronyms are not unusual in financial markets, but the list is about to get a lot bigger. OTFs, SIs, TOTV, LIS and SSTI – these are just a selection of the terms that are about to elbow their way into Europe’s financial vernacular as the revised Markets in Financial Instruments Directive (MIFID II) comes into force.

Scheduled for implementation from next year, MIFID II and its accompanying regulation, MIFIR, will introduce new trading venues, a trading obligation, a new transparency regime and strict reporting requirements, among other things. It is vast in scale, and it’s very, very complicated. So much so that it’s difficult to find many practitioners who are truly confident its implementation will be completely smooth and without incident.

That’s partly due to a lack of clarity in key areas. For example, market participants point to a critical need for equivalence decisions to avoid crippling liquidity fragmentation. There has been some recent progress between the European Commission (EC) and the Commodity Futures Trading Commission, but trading venue equivalence needs to be in place before the end of the year to ensure cross-border trading is not affected after the start date of MIFID II.

Outside of MIFID II, there’s plenty going on to keep firms busy. Along with the start of the EU Benchmarks Regulation from January 1, European regulators are reviewing the European Market Infrastructure Regulation (EMIR), with the objective of reducing complexity and unnecessary costs. The EC is also reviewing rules for the supervision of third-country central counterparties (CCPs) – and, as part of that, has proposed a location policy for those CCPs that pose significant systemic importance to the EU.

In this issue of IQ, we take a quick tour of some of the issues keeping European policy-makers busy. The first article looks at MIFID II, and highlights some of the remaining areas of uncertainty. We then turn to the review of EMIR, and highlight the requirements that would benefit from reform. We round off the package with an article on CCP supervision, and present ISDA’s analysis on the impact of a possible location policy for third-country CCPs.

Click on attached PDF to read the full issue.

 

Documents (1) for Leap to MIFID II – Vol 3, Issue 3: November 2017

Response on Commodity Derivatives Markets

On April 22, ISDA and FIA submitted a joint response to the European Commission’s (EC) consultation on the functioning of commodity derivatives markets and certain aspects relating to spot energy markets. In addition to questions on position management, reporting and...

Episode 50: The Value of Derivatives

A new report from ISDA shows that companies all over the world use derivatives to alleviate uncertainty, transfer risk and enhance profitability. ISDA discusses the findings with Boston Consulting Group’s Roy Choudhury. Please view this page via Chrome to access...

ISDA/IIF Response to EC Market Risk Consultation

On February 22, ISDA and the Institute of International Finance (IIF) submitted a joint response to the European Commission’s (EC) consultation on the application of the market risk prudential framework. The associations believe the capital framework should be risk-appropriate and...

ISDA Submits Letter on Environmental Credits

On April 15, ISDA submitted a response to the Financial Accounting Standards Board’s (FASB) consultation on environmental credits and environmental credit obligations. The response supports the FASB’s overall proposals to establish clear and consistent accounting guidance for environmental credits, but...