Tag Archives: MiFID 2
ESMA has updated its supervisory briefing for regulators on the suitability requirements under MiFID 2. The briefing covers: when a suitability assessment is needed; information to clients on the assessment; getting information from clients; arrangements necessary to understand products; arrangements necessary to understand the suitability of an investment; suitability report; staff qualifications; and record keeping.
AFME has published guidance on financial analysts’ interaction with representatives of private companies and their financial advisers under the revised rules in COBS 12.2.21 which took effect in July. The change stemmed from the MiFID Org Reg, which states that financial analysts should not engage in activities other than the preparation of investment research where […]
ESMA has updated its FAQs on MiFID 2 and MiFIR on market structures and transparency. New questions look at: how derivatives are classified for transparency purposes amending an existing question on the default liquidity status of bonds the scope of the MiFIR pre-trade transparency waiver market making activities and incentives in stressed trading consitions bulk […]
Steven Maijoor has spoken on the state of implementation of MiFID 2 and preparing for Brexit. He focussed on the impact of MiFID 2 on non-EU trading venues – in particular looking at the impact of the trading obligation and on secondary markets and transparency. He looked also at the role and increase in market […]
ESMA has written to the European Commission on various issues which are relevant in the context of Brexit but also to third-countries generally. There has already been discussion on the MiFID 2/MiFIR requirements on trading venues, and this letter now addresses: how MiFIR treats third country firms providing services and activities to ECPs and per […]
ESMA has confirmed the further extension of the restriction on marketing, distributing and selling CFDs to retail clients, for another three months. Alongside the extension it has updated its FAQs, particularly to clarify how the measures apply to rolling spot forex.
PIMFA and TISA have published a MiFID 2 Feedback Template and a guide on distributor reporting. It hopes the documents will help firms to meet their responsibilities under MiFID 2 and particularly that the Q&A will help distributors to make compliant returns to asset managers. Comments are welcome on the proposed template until 12 July. […]
ESMA has published its final guidelines on certain aspects of the MiFID 2 suitability requirements. The guidelines build on their MiFID 1 predecessor, and broaden them to address technological developments such as a the development of robo-advice and take into account supervisory experience and the results of reviews and surveys. The guidelines also include a […]
ESMA has updated its FAQs on investor protection and intermediaries under MiFID 2. New questions added in May focus on: best execution: a new question addresses what is meant by “other liquidity provider”; client categorisation: new questions look at when and how a firm can assess whether it can treat an individual private investor as a professional client, […]
Andrew Bailey has given a regulatory perspective on asset management. His speech considered: market-wide risks: he looked at the growth in the asset management sector and particularly the increase in proportionate growth of the asset management sector over others. open-ended funds: he considered the risks of funds offering daily redemption in illiquid assets which also […]
FCA has created a new page on its website explaining the basic advice regime under MiFID 2 and the IDD. It explains it needed to update its guidance to firms to explain the impact of these pieces of legislation. In particular, it addresses how it needed to apply some MiFID 2 requirements (or “at least […]
PRA has published an update on responses to certain parts of its CP18/17 Occasional consultation. The update explains how PRA prepared to bring into force rulebook changes relating to the implementation of the Benchmark Regulation, MiFID 2 and the IDD, pending completion of relevant legislative changes.
UK Finance reports that initial impressions of MiFID 2 implementation are that it has been smoother than expected. While there have been some teething problems and outstanding issues, firms seem, generally, to have been able to adapt within the implementation deadline.
ESMA has published several lists of documents and information relating to MiFID 2. It has published: a public register of derivative contracts subject to the MiFIR trading obligation a list of trading venues temporarily exempted from open access under MiFIR and a first set of position management controls for commodity derivatives. It has also decided […]
MiFID 2 implementation date has finally arrived. We have written an article to remind firms of the key changes and action points. FCA has also published a series of updates covering: transitional arrangements for trading venues, which confirms FCA has agreed a transitional arrangement for ICE Futures Europe and LME, such that the open access […]
The Commission has ruled the Swiss Exchange AG and BX Swiss AG as equivalent to regulated markets under MiFID 2.
UK Finance has published guidance for firms on product governance and retail costs and charges under MiFID 2. The guidelines on product governance look at the “target market” criteria, which include recommendations on information exchange between manufacturers and distributors. UK Finance notes that MiFID 2 will have the effect of creating industry-wide renegotiations and has […]
The Commission has recognised a number of trading venues in the US, Australia and Hong Kong as equivalent for the purposes of the MiFID 2/ MiFIR share trading obligation. This follows publication in the OJEU of the decision of equivalence in relation to certain US swaps markets.
FCA has written a Dear CEO letter, expressing its concerns on the continued practice of “payment for order flow”. Despite FCA having criticised the practice in the past, it is aware that many brokers are still doing it, and are devising strategies to get round the even stricter MiFID 2 restrictions. FCA warns firms that […]
The latest edition of Market Watch looks at: a reminder that an investment firm’s transaction report must reflect the transaction from its own perspective, reporting its immediate counterparty or client (whether or not subject to MiFIR). Whether to report at block or allocation level depends on what the immediate counterparty confirms as “executions” a reminder […]
At FCA’s Board meeting on & December, it made several new rule instruments, covering (among other things), several changes to take effect from 3 January 2018: minor changes relating to MiFID 2 implementation, including a new definition of “high frequency algorithmic trading technique”, amending various definitions relating to derivatives to ensure they reflect changes to […]
Megan Butler has spoken on assessing the value of financial advice. She spoke of the growing importance of financial advice as increasing numbers of people need help making “sense” of their choices. Recent FCA studies have shown that, in 2015, 93.1% of advice on investments, pension accumulation and retirement outcomes was suitable. This figure was […]
ESMA has issued: a further update to its FAQs on market structure issues under MiFID 2, including on DEA and tick sizes an update to its transparency FAQs, including new questions on a range of pre- and post-trade transparency issues and on third countries; and an update to its FAQs on MiFIR data reporting.
ESMA has updated its set of FAQs on MiFID 2 investor protection. New questions cover: post sale reporting – to confirm that the duty to report on depreciation of portfolios applies to professional clients, and not just to retail; record keeping – to confirm securities financing transactions are within the scope of record keeping requirements; […]
At FCA’s latest board meeting, it made a new guide, the MiFID 2 Guide (to be known as M2G). The Guide takes the form of regulatory guidance under FSMA. FCA had consulted on the guide, which comprises two sections, each setting out how FCA has transposed MiFID 2 and signposting the derivations and context of […]
FCA’s latest Market Watch newsletter highlights: the fast approach of the deadline for ensuring all entities that need an LEI have one; ESMA’s reference data files that are available to download; the transitional arrangements FCA has put in place as it decommissions its MiFID transaction reporting system and moves to the new Market Data Processor […]
ESMA has announced the launch of the second phase of its Financial Instrument Reference Database (FIRDS). It provides access to reference data that will eventually allow market participants to identify instruments subject to the MAR and MiFID 2/MiFIR reference data reporting requirements.
Steven Maijoor has spoken on the state of European financial markets. He spoke not only about Brexit, focussing on the need for a strong supervisory culture, but also on the importance of building the CMU and improving understanding of trends, risks and vulnerabilities in the financial markets. He spoke about the continuing lack of trust […]
ESMA has published a set of Q&As on post-trading issues under MiFID 2 and MiFIR. There is currently only one question, on rules for straight-through processing.
ESMA has published a briefing highlighting the importance of the LEI in an attempt to ensure market participants have done what they need to to comply with the LEI requirements under MiFID 2 by 3 January 2018. Its EMIR experience suggests reporting entities are likely to leave it to the last minute, which would cause […]
ESMA’s 2018 work plan continues its focus on supervisory convergence and risk assessment. Unsurprisingly, it will place particular emphasis on consistent application of MiFID 2 and MiFIR by firms and regulators. Its other key work will be around its mandate for the ESA and CCP reviews.
ESMA has updated the MiFID 2 FAQs in respect of: investor protection and intermediaries. It has added 12 new questions, focusing on client categorisation, post-sale reporting, recording of calls and communications, best execution, and information on costs and charges. transparency and market structures. On transparency, there are several new questions, particularly on non-equity transparency, the […]
ESMA has published its final draft RTS implementing the trading obligation under MiFIR. The standards, part of the move to make OTC trading in liquid derivatives take place on organised venues, covers interest rate swaps and credit default swaps. ESMA has decided to make the following products subject to the trading obligation: Fixed-to-float interest rate […]
Meghan Butler has spoken on how FCA is clarifying its supervisory approach to asset managers. She looked at FCA’s mission and its recognition of the importance of the asset management industry. She spoke of the findings of the asset management review and said FCA is still working through responses. In the meantime, the CMA has […]
ESMA and the national regulators in EU member states have updated their work plan for the opinions MiFID 2 requires on pre-trade transparency waivers and position limits. Around 700 of the former and 110 of the latter opinions need to be issued, so there is a plan to ensure they can be implemented pending the […]
Mark Steward has spoken on the increase in FCA investigations into market conduct over the past year. He said the 75% increase results from: more investigations into capital market disclosure issues the extension of scope of the reporting regime which MAR has brought – including a 77% increase in reports because of the MAR requirements […]
ESMA has updated its FAQs on MiFID 2 and MiFIR market structures. The updates relate to access to CCPs and trading venues and address timings of notifications and applications for exemptions by trading venues.
The Commission is urgently making an amendment to clarify the scope of the MiFID 2 systematic internaliser category. It has noted certain technological developments which risk undermining what should be a clear separation between bilateral own account trading when executing client orders and multilateral trading. The Commission stresses that a systematic internaliser is not allowed to engage, […]
We wrote an article for Financial Adviser on the impact of MiFID 2 on article 3 firms.
FCA has published a new page on its website outlining how a firm can apply for a passport under MiFID 2. It also includes details of deadlines and links to the relevant application forms. Firms need to use these forms if they are newly authorised under MiFID 2 or where they relate to activities implemented as MiFID 2 […]
ESMA is consulting on guidelines on certain aspects of the MiFID 2 suitability requirements. ESMA wants to build on existing guidelines to: take account of technological innovations including the move to robo-advice; consider the experiences of regulators on the current requirements; and cater for studies on behavioural finance that have been undertaken. It asks for […]
ESMA publishes guidelines on cooperation between authorities under the Central Securities Depositories Regulation
ESMA has today published guidelines (the Guidelines) to ensure that competent authorities (CAs) apply the Central Securities Depositories Regulation (CSDR) in a consistent, efficient and effective supervisory manner, which includes cooperating with each other. Under Article 14(1) of the CSDR, CAs and ESMA are expected to cooperate closely, including exchanging all relevant information applicable under the regulation. […]
ESMA has today updated its Q&A topics on best execution and recording of telephone conversations and electronic communications. Best execution MiFID II requires investment firms to take all sufficient steps to obtain the best possible result for the client when executing orders. It also requires trading venues to publish, without charge, data on the quality of the […]
The product governance guidelines under MiFID II are part of the regulatory framework aimed at protecting investors across the EEA. ESMA published its final report on the guidelines on 2 June 2017. Bond Dickinson has produced a briefing note that looks at: the purpose of the guidelines, how the guidelines differ from ESMA’s consultation, the […]
We have written an article on the current state of play of MiFID 2 implementation in the UK, including a detailed summary of FCA’s final rules.
ESMA has updated its set of FAQs under MiFID 2 to include new guidance on: commodity derivatives position limits and position reporting market data issues and market structure issues on multilateral trading systems, algorithmic trading and DEA, and access to CCPs and trading venues
ESMA has published and then updated its opinion on the ancillary test for commodity derivatives under MiFID 2. The update relates only to a typo in the original. The opinion sets out ESMA’s views on how to determine the market size figures to ensure the MiFID 2 Delegated Regulation can be properly applied.
MiFID 2 / MiFIR introduces transparency requirements for equity and non-equity instruments and allows competent authorities to waive the obligation for market operators and investment firms operating a trading venue, to make public their pre trade information. Under RTS 2, competent authorities are to publish information on the liquidity classification of the different asset classes. The […]
On the deadline of 3 July, FCA has made its final rules implementing many aspects of MiFID 2. Its second feedback statement includes its response to consultation on amendments to PERG CASS complaints handling inducements, including adviser charging and inducements relating to research client categorisation disclosure requirements independence suitability appropriateness dealing and managing underwriting and […]
ESMA has published a statement setting out what it is doing in relation to sales of CFDs, binary options and speculative products to retail investors. It feels that its guidance and FAQs published to date have not led to as great a supervisory convergence as it would wish and, as a result, is considering using its […]
FCA has published its review of appropriateness assessments firms make when selling CFD products. The review followed last year’s dear CEO letter which asked firms to consider whether their client take on processes complied with the Principles and COBS requirements. FCA found that, despite this, firms were not meeting its expectations, especially: they were not […]
ESMA has published its final guidelines on trading halts under MiFID 2. The guidelines calibrate trading halts and provide guidance for regulated markets on how the calibration works and the information and reporting requirements associated with activating volatility-management mechanisms. National competent authorities now have 2 months in which to notify ESMA whether they intend to […]
Treasury has made the FSMA (Markets in Financial Instruments) Regulations 2017 which make changes to FSMA and other primary and secondary legislation to make the legislative amendments necessary to implement MiFID 2 that are not separately addressed by the Regulations amending the RAO and putting in place the authorisation and supervision process for DSRPs. The […]
The ITS on standard forms, templates and procedures for DSRP authorisation under MiFID 2 have been published in the OJ.
Commission Implementing Regulation (EU) 2017/1110 of 22 June 2017 laying down implementing technical standards regarding standard forms, templates and procedures for the authorisation of DRSPs and related notifications under MiFID 2 has been published today in the Official Journal of the European Union.
The ITS under MiFID 2 on the format of position reports have been published in the OJ.
IOSCO has published a report looking at supervisory practices relating to incentives for order routing. It considers how different jurisdictions require firms to manage conflicts associated with routing orders and best execution. The report focuses on: monetary incentives paid or received by brokers to or from third parties; internalisation and use of affiliated venues that […]
ESMA is consulting on its draft technical standards specifying the trading obligation for derivatives under MiFIR. It has revised its previous approach, and now wants comments by 31 July on the new proposals. These include how to phase-in the trading obligation. The MiFIR trading obligation is closely linked to EMIR. Once a class of derivatives needs […]
The RTS under MiFID 2 on information to be notified by investment firms, market operators and credit institutions when applying for a MiFID 2 passport has been published in the OJ. The RTS include the information required for a tied agent passport notification.
FCA has reminded firms that they need to submit applications for authorisation and variations of permission related to MiFID 2 by 3 July, to enable FCA to consider them before 3 January 2018. If an application is not determined by then, firms may be unable to carry on relevant business until properly authorised.
ESMA’s annual report for 2016 focusses on its activities in: assessing risks to investors, markets and stability; creating a single rulebook; promoting supervisory convergence; and supervising credit rating agencies and trade repositories. The narrative to the report looks at its work with the other ESAs, latterly on PRIIPs and work to come on transparency on […]
FCA’s latest policy development update provides information on its recent and upcoming publications. Only one key publication is shown as scheduled for June – a policy statement on enhancing conduct of business rules for firms providing cfd products to retail clients. The policy statement on the first CP on IDD implementation is due in September, but there is […]
The Commission has made some of the outstanding technical standards under MiFID 2, and these have been published in the OJEU: ITS on standard forms, templates and procedures for supervisory co-operation; ITS on standard forms, templates and procedures for consulting other supervisors before granting authorisation; and ITS on standard forms and cooperation agreements in respect of […]
Steven Maijoor has spoken to the FIA on ESMA’s current work, including its preparations for MiFID 2. He stressed that there will be no further delay in implementation. He referenced ESMA’s recent and ongoing work on trading and transparency requirements, and heralded an imminent consultation on the trading obligation for derivatives. He also spoke of […]
ESMA has published its final report on product governance guidelines under MiFID 2. It received over 100 responses to its consultation on the guidelines, which were generally supportive. However, ESMA has made some changes to the guidelines as a result of the comments. The final guidelines will now apply from 3 January 2018 and will […]
ESMA has updated its set of FAQs on MiFID 2 to address issues relating to market structures, commodity derivatives and transparency. It has also published its opinion on transparency and position limit regimes for instruments traded on non-EU trading venues.
Emma Radmore will be presenting the opening address on a MiFID 2 update at the Compliance Register’s Regulatory Summit on 21 June.
PRA has published its policy statement with relevant supervisory statements and rule changes in relation to MiFID 2 implementation. The changes: introduce new PRA rules to implement the MiFID 2 requirements on the management body and organisational requirements; delete several rules that are now superseded by the directly applicable Level 2 Regulation on organisational issues […]
We have written a detailed summary of FCA’s “near final” rules and new MiFID 2 consultation.
ESMA has added 10 new questions to its Q&As on investor protection under MiFID 2 and MiFIR. The new questions cover: timing requirements for execution reports; how to report when orders are sent for execution to different entities within a group; inclusion of ECP transactions within data execution venues publish; how investment firms operating OTFs […]
FCA has published the form firms that already hold certain investment-related permissions should use to notify it that they wish to sell or advise on structured deposits once MiFID 2 takes effect. Only firms with permission currently to deal, arrange, make arrangements, manage or advise in or on investments can use the notification. Other firms […]
FCA has published a near final version of many of the rule changes to implement MiFID 2. The rules it has now more or less finalised relate to: data reporting services providers (DSRPs) – a new category of firm; position limits and reporting for commodity derivatives; and systems and controls requirements for firms that provide […]
FCA made several changes to its rulebook at its Board Meeting on 30 March. Key changes include: changes to fees relating to the FOS and periodic fees for exchanges and benchmark administrators; changes to the FSCS management expenses levy limit; implementing the policy proposal for PSR fees; allowing FCA to set fees relating to MiFID […]
The FSMA (Regulated Activities) (Amendment) Order 2017 has been made. It makes several amendments to FSMA and secondary legislation, primarily the RAO, as part of the UK’s implementation of MiFID 2. Key provisions: enable applications for authorisations or variations of permission that relate to MiFID 2 changes to be made and determined from 1 April. […]
We have written an article for Law360.com setting out a MiFID 2 essential checklist for arrangers/advisers and wealth managers.
Following FIN’s report that Treasury had published its feedback and draft legislation for MiFID 2 implementation, we have now written an article on the feedback.
We’ve written an article on FCA’s recent MiFID 2 application and notification guide.
We’ve prepared a summary of record keeping requirements and the obligations of firms around recording of calls under MiFID 2. It’s one of many articles we’ve written (and will keep on writing) on MiFID 2 and the changes UK firms will need to consider.
FCA’s latest “Regulation Round up” focuses on: some big issues FCA plans to address in 2017, such as the progress of the FAMR, the extension of the SMR and the closure of lending reviews; the interim report on the Asset Management Market Study, reminding that the consultation period for responding on the remedies FCA proposed […]
FCA has published an application and notification user guide on MiFID 2. The guide deals with applications for new authorisation as investment firms or data reporting providers, recognition of investment exchanges, Variation of Permission (VoPs) and change of legal status. It also deals with notifications to provide regulatory information to FCA by FCA regulated firms, recognised […]
The Law Society has published its response to HMT’s consultation on amending the definition of financial advice in Article 53 of RAO. Generally, the Law Society supports the policy objective of appropriate regulatory simplification. Like the CLLS, it is agreed that the definition of the regulated activity should be limited to personal recommendations, and should […]
FCA has published its fourth consultation on changes to its rules to implement MiFID 2. This consultation is in many ways a sweep-up to cover all changes not previously covered in FCA’s other consultations. To a large extent it covers rules that apply to specialist firms. The changes, although few are fundamental, nevertheless affect most […]
FCA is consulting on policy proposals for regulatory fees and levies in 2017/18. The main areas in which it proposes to increase its fees are to cover its costs of tackling illegal money laundering and of implementing the MiFID 2 package. It notes it will keep under review all its proposals in light of Brexit. […]
FCA’s latest Policy Development Update indicates we can expect its fourth consultation paper on MiFID 2 implementation soon, maybe before the end of the year. It then promises feedback on consultations to date during the first half of 2017 – and will have to make its final rules by July to meet the transposition deadline. […]
PRA has published its second consultation paper on changes it needs to make to its rules as a result of MiFID 2. This paper focuses on the changes needed to take account of the requirements in the MiFID 2 Delegated Regulation on Organisational Requirements, and deals also with the practicalities of variations of permission to […]
Andrew Barber and Emma Radmore gave an interview to Lexis PSL on ESMA’s draft product governance guidelines for manufacturers and distributors of products covered by MiFID 2. We have now published the contents of this interview.
PRA has published its response to its consultation on implementing MiFID 2 into its Rulebook. It has made some clarificatory changes to its proposals for its rules on Algorithmic Trading and has now published its final form rulebook instruments on both this and Passporting under MiFID 2 for PRA-regulated firms.
ESMA has published a new set of FAQs on investor protection issues under MiFID 2. The initial questions cover best execution, suitability and appropriateness, recording telephone conversations and electronic communications, record keeping, investment advice on an independent basis, underwriting and placement of a financial instrument, and inducements (research). No doubt ESMA will build significantly on […]
ESMA is consulting on draft guidelines for supervisors to help them assess whether product manufacturers and distributors have properly complied with MiFID 2’s requirements on product governance. The guidelines focus on the determination of target markets for products.
FCA has published its third, and longest, consultation paper on implementing MiFID 2. The paper includes analysis of, and proposed Handbook changes for , the key conduct of business and related requirements within the MiFID 2 package. Among the changes are those to COBS in relation to inducements, charging, client categorisation and advising. FCA needs […]
We have recently written several articles on MiFID 2: MiFID 2: FCA gathers steam Post Brexit: What to do about MiFID 2? Conduct of Business under MiFID 2 – getting the gap analysis right FCA consults on major MiFID 2 changes ESMA’s MiFID 2 product governance guidelines PRA consults further on MiFID 2 FCA publishes […]