Alternative Investment Management Association Representing the global hedge fund industry
The first Markets in Financial Instruments Directive (MIFID) came into force on 1 November 2007, replacing and expanding upon the Investment Services Directive. MiFID’s objective was to increase the integration and efficiency of EU financial markets by establishing a harmonised regulatory framework for the provision of investment services in financial instruments across the EU and for the operation of regulated markets by market operators.
Following the global financial crisis, the European Commission (Commission) decided to review the MiFID framework and on 20 October 2011 published proposals for (i) a revised Directive (MiFIDII) and (ii) a new Regulation (MiFIR).
Level 1 Texts
The European Parliament voted on its amendments to the Commission’s proposals on 26 October 2012 and the Council reached a General Approach in June 2013. Trialogues between all three EU legislative institutions then commenced, with a political agreement for the Level 1 MiFIDII/MiFIR texts being reached on 14 January 2014. The politically agreed Level 1 texts were formally adopted by the European Parliament on 15 April 2014 and the Council on 13 May 2014.
The Level 1 text amends the MiFID I regime by, among other things:
MiFIDII and MiFIR were published in the Official Journal of the European Union on 12 June 2014. A large amount of implementation work is left to be completed, thus the rules of MiFIDII/R will not enter into effect for 30 months after publication.
Level 2 Texts
The Level 1 texts of MiFIDII/R provide the main requirements and obligations to be placed upon in-scope entities. However, key technical details on the precise meaning and implementation of these requirements have yet to be provided. The European Securities and Markets Authority (ESMA) are required to provide over 100 pieces of technical advice to the Commission on potential delegated acts, draft regulatory technical standards (RTS) and draft implementing technical standards (ITS). These non-essential technical details and implementing measures form what is known as the 'Level 2' phase of MiFIDII/R.
ESMA launched its Level 2 consultation process on 22 May 2014 with the publication of a:
AIMA submitted a response to both papers. We now await a final consultation on ESMA's draft RTS.
Once ESMA has submitted its advice and draft technical standards to the Commission, the Commission will then publish its final Level 2 delegated and implementing regulations for MiFIDII/R.
Text of MiFID 1 (April 2004)
MiFID I Implementing Regulation (September 2006)
MiFID I Implementing Directive (September 2006)
MiFIDII Level 1 Text (June 2014)
MiFIR Level 1 Text (June 2014)
Reply form for the ESMA MiFID II/MiFIR Discussion Paper (August 2014)
AIMA position paper on MiFIDII/R (January 2012)