ESMA consults on MiFID reforms 22 May 2014Paris Reporter: Stephen Durham
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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 is the first step in the process of translating the MiFID II/MiFIR requirements into practically applicable rules and regulations to address the effects of the financial crisis and to improve financial market transparency and strengthen investor protection.
MiFID II/MiFIR introduces changes that will have a large impact on the EU’s financial markets, these include transparency requirements for a broader range of asset classes; the obligation to trade derivatives on-exchange; requirements on algorithmic and high-frequency-trading and new supervisory tools for commodity derivatives.
It will also strengthen protection for retail investors through limits on the use of commissions; conditions for the provision of independent investment advice; stricter organisational requirements for product design and distribution; product intervention powers; and the disclosure of costs and charges.
Steven Maijoor, chair of ESMA, said: “The launch of [the] MiFID II/MiFIR consultation process is an important step in the biggest overhaul of financial markets regulation in the EU for a decade.”
“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. These changes are key to restoring trust in our financial markets.”
“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.”
The main proposals in the financial markets structure, transparency and regulation area cover enhanced transparency and trading obligations, micro-structural issues, and data publication and access issues.
Investor protection is also a priority for ESMA, and they are to consult on inducements, product governance, product intervention/banning and
improved information on costs and charges.
In addition, the draft regulatory technical standards in the investor protection area relate to the authorisation of investment firms, passporting and certain best execution obligations.
ESMA will hold three public hearings about secondary markets, investor protection and commodity derivatives issues on 7 and 8 July 2014.
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