MIFID II Regulatory Requirements

The Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID), the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR) will enter into force on 3 January 2018.

In particular, Firms will need to assess their regulatory permissions and some Firms may need to assess their entire regulatory approach.  CPA Audit can provide advice, help and support with any of these issues.

CPA Audit have a two-stage methodology for the adoption of MiFID II for clients.  Firstly, we provide a high level “health” check identifying areas of potential issue.  Secondly, we carry out a full GAP analysis to identify problems and how they can be resolved.  Contact any of our consultants for a preliminary discussion.

MiFID II contains new EU-wide rules governing investment firms, trading venues and market structures, as well as third-country firms providing investment services or activities in the EU.

Some key elements of the changes are:

  •   the introduction of a new category of trading venue – the Organised Trading Facility (OTF) – which will bring additional trading activity within the scope of regulation;
  •   a requirement for OTC derivatives contracts subject to the EMIR clearing obligation to be traded on certain types of trading venues;
  •   a general increase in regulatory scope, with additional financial instruments and fewer and/or narrowed exemptions;
  •   increased regulation surrounding the Financial Promotions regime for derivatives;
  •   the extension of pre- and post-trade transparency requirements to non-equities;
  •   changes extending the data required for the transaction reporting regime;
  •   new regulatory rules for High Frequency Trading (HFT);
  •   a new distinction between ‘independent’ and restricted financial advice.
  •   increased regulation of Investment Research with a ban on third-party inducements and the introduction of Research Payment Accounts;
  •   new product governance regulations for product “manufacturers”;
  •   new corporate governance requirements equivalent to those applied under CRD IV (the Capital Requirements Regulation (Regulation (EU) No 575/2013) and the Capital Requirements Directive (Directive 2013/36/EU)).

Following the publication of the final MIFID II rules, our Compliance team have written a detailed analysis of the upcoming changes to the regulatory regime. Please find the two part analysis at our  Regulatory briefings page.

MIFID II Regulatory Requirements