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
Latest
ISDA Briefing on EMIR Compromise Amendments under MISP
On November 2, ISDA published its recommendations on the European Parliament (EP) compromise amendments to EMIR under the Market Integration and Supervision Package (MISP). The briefing covers five areas: transaction reporting (Article 9), non-financial counterparties (Article 10), initial margin model...
Response on UK MIFIR Reporting Guidelines
On November 6, ISDA responded to the Financial Conduct Authority’s (FCA) consultation CP26/34 ‘Preparing for the new transaction reporting regime’ on the upcoming changes to the UK Markets in Financial Instruments Regulation (MIFIR) transaction reporting regime, as set out in...
Response on Transaction Reporting and Transparency
On October 30, ISDA submitted comments on the European Parliament’s (EP) proposed transaction reporting and transparency-related amendments to the European Commission’s Market Integration and Supervision Package (MISP). On transaction reporting, ISDA commends the EP’s ambition but cautions against trying to...
Joint Paper on EC Tax Omnibus
On November 5, ISDA, the Association for Financial Markets in Europe (AFME) and the International Securities Lending Association (ISLA) submitted a paper to support the proposed European Commission (EC) Tax Omnibus as a route to simpler, more certain cross-border taxation....