On September 28, the European Securities and Markets Authority (ESMA) published a final report (Report) containing draft regulatory and implementing technical standards (Standards) on the revised EU Markets in Financial Instruments Directive (MiFID II) and the EU Markets in Financial Instruments Regulation (MiFIR).
The Standards set out in the Report were the subject of a series of prior publications, including a Discussion Paper from May 2014 and two Consultation Papers from December 2014 and February 2015, respectively. In the Report, ESMA sets out Standards covering 28 topic areas; the Report does not, however, cover all the Standards required by MiFID II and MiFIR, which will be published in due course.
The Standards set out in the Report address the following areas:
- pre-trade and post-trade transparency for equity and non-equity financial instruments, including the trading obligation for over-the-counter derivatives subject to mandatory clearing (Standards 1–5);
- so-called “micro-structural issues,” including algorithmic trading, market making, direct market access and co-location (Standards 6–12);
- transaction data reporting and non-discriminatory access to clearing, trading and benchmarks (Standards 13–16);
- requirements applying on and to trading venues (Standards 17–19);
- commodity derivatives, including the “ancillary exemption” from investment firm authorisation and commodity derivative position limits (Standards 20 and 21);
- market data reporting (Standards 22–25);
- straight-through processing requirements for derivatives (Standard 26); and
- best execution and investor protection requirements (Standards 27 and 28).
A press release from ESMA (which also covers the contemporaneous release of draft regulatory and implementing technical standards under the EU Market Abuse Regulation) states that ESMA has sent the Report to the European Commission (EC), which now has three months to decide whether to endorse the Standards. Once the EC endorses the Report, the next stage of the EU legislative process is for the Council of the European Union and the European Parliament to assess the Standards and, if necessary, to raise any objections. If there are no objections, then the Standards may be finalized, which may be anticipated in January 2016 alongside the corresponding MAR standards. The new rules will be applicable across all the European Union from January 3, 2017.