Background 

When they come into effect, MiFID II (Directive 2014/65/EU) and MiFIR (Regulation (EU) No 600/2014) will repeal and recast existing MiFID (known as the Markets in Financial Instruments Directive). MiFIR will also make some amendments to EMIR (the European Market Infrastructure Regulation) and make other changes relevant to derivatives.

When do MiFID II and MiFIR take effect?

MiFID II and MiFIR came into force on 2 July 2014, but generally do not come into effect until 3 January 2017.  In the meantime, EU member states must adopt and publish by 3 July 2016 measures transposing MiFID II into national law.  Like EMIR, MiFIR is an EU regulation and so is directly applicable in EU member states.

Much of the detail is to be contained in Level 2 measures, most of which are required to be in place by December 2016. A number of consultations have already been conducted by ESMA.

Latest step along the MiFID II / MiFIR path

On 28 September 2015, the European Securities and Markets Authority (ESMA) published its final report (ESMA/2015/1464) on draft technical standards (regulatory technical standards (RTS) and implementing technical standards (ITS)) under MiFID II and MiFIR.

ESMA’s final report sets out in an annex, 28 draft technical standards. The draft RTS and ITS cover a broad range of areas including the MiFIR obligation for FCs and NFC+s to trade with each other in certain classes of derivatives only on regulated trading venues (RTS 4) and in relation to commodity derivatives (RTS 20 (the ancillary activity exemption from authorisation) and RTS 21 (position limits)).

What next?

The European Commission has 3 months to decide whether to endorse ESMA’s draft technical standards. Once the Commission has endorsed ESMA’s draft technical standards, the European Parliament and the Council of the European Union must assess them. If they have no objections, the technical standards may then be finalised. For the most part, the technical standards apply from 3 January 2017. 

The draft technical standards attached to ESMA’s report are not the end of the story.  Further technical standards will be published in due course.