MiFID 2 / MiFIR

MiFID 2 / MiFIR

MiFID II is a significant piece of legislation – as big a project as MiFID I. Impacts will be from board to desk levels, affecting most functions and business lines. 104 Technical Standards add detail to the MiFID II framework, with very short time to review Discussion Paper and Consultation Paper. MiFID is connecting and linking with a number of other Directives (EMIR, MAD, CSDR, AIFMD, CRD IV) and is also creating harmonisation across Directives. Firms must take stock of business activities that will be affected and design project.

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What is MiFID 2 / MiFIR?

  1. Transparency
  2. Transaction reporting
  3. Micro-structural Issue
  4. Commodity Derivatives
  5. Market Infrastructure, Trading and Clearing
  6. Governance
  7. Data Publication and Access
  8. Authorisation, Branches and Passporting
  9. Investor Protection
 
Transparency
  • Pre-trade transparency extended to all liquid MiFID products. Waivers tightened.
  • Post-trade transparency extended to all liquid MiFID products. Deferred publication tightened.
Transaction Reporting
  • Transaction reporting requirements extended to new products and new data fields.
Micro structural Issues
  • Direct electronic access needs increased governance and control
  • High frequency trading firms to be authorized and regulated
  • Algorithmic trading subject to testing, review and disclosure, increased fees
Commodity derivatives
  • Commodity derivatives position limits for both ETD and OTC. Daily position reporting.
Trading and Clearing
  • Trading venues reclassified as MTF, OTF, SI
  • OTC derivatives trading on centralised venues where subject to clearing
  • Indirect clearing arrangements extended to ETD products
  • Formalised criteria required for portfolio compression and data to be published
  • Increased real time processing for trading, clearing and transfer of collateral
Data Publication and Access
  • Non-discriminatory access between CCPs and trading venues
  • Non-discriminatory access to and license requirement for benchmarks
Investor Protection
  • Restrictions on advice and new requirements for inducements and unbundled services.
  • New definitions of complex and non-complex products.
  • New emphasis on suitability and appropriateness tests.
  • Strengthening of client asset protection and appointment of officer
  • Best execution extended to new products, increased disclosure
 

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