MIFID II – Timeline. What are the most important issues?
The FCA has published a recent speech by David Lawton, Director of Markets Policy and International, FCA. In it he looks at the timeline for finalising MiFID II and MiFIR by 3 January 2017. The following is a summary of what we, at Objectivus, regard as the most important issues he raises.
MiFID II at its heart is seeking to make European markets more transparent, efficient, attractive and safer to invest in. Having recently seen ESMA’s draft technical standards the remaining time until 3 January 2017 is predominantly working through technical rules and implementation and specifically the draft technical standards (RTS and ITS) and Delegated Acts. On 3 July 2016 the UK must have turned those parts of legislation expressed in directives into national law or rules.
The Commission now has 3 months to endorse the draft technical standards, then they are subject to the scrutiny by the European Parliament and Council which is expected to take several more months. If there are no significant changes advised by these bodies then we could see the technical standards finalised by the end of Q1 2016.
As for the Delegated Acts the Commission has been considering ESMA’s advice submitted last December but has yet been able to finalise and publish them, but we expect this in December. Parliament and the Council also have 3 months, which can be extended to 6 months, to object to these acts and at present we do not know if they will.
Some of the elements will need to be transposed into national law through either legislation from the UK Parliament or into the FCA handbook. The FCA is expecting to produce 2 more Consultation Papers on implementation of the MiFID II conduct of business and organisational requirements, one in December and another in early 2016.
As for authorisations new legislation will require certain firms such as OFTs, firms undertaking speculative trading in commodity derivatives and firms using high frequency trading methods to be registered for the first time. For some this will mean applying to the FCA for new permissions and others will have to go through the application process for the first time. It is the FCA’s intention to start making new application forms available in early 2016 and start accepting draft applications from April.
At Objectivus we believe firms should be at least in the early stages of planning having considered what the new rules could mean for their firm and specific business lines.
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