The Markets in Financial Instruments Directive (MiFID) entered into force in November 2007. Embedded in MiFID is a process for reviewing certain provisions in the Directive.

As part of the process embedded in MiFID for reviewing certain provisions of the Directive, the Committee of European Securities Regulators (CESR) will provide the European Commission with its technical advice by 31 July 2010 so that the Commission can report to the European Parliament on possible changes to MiFID in early 2011.

On 13 April 2010, CESR published three consultation papers on technical advice that address areas of MiFID where it has identified a need for improvement:

  • Investor protection and intermediaries. The main topics covered in this consultation paper are: (1) Requirements relating to the recording of telephone conversations and electronic communications. (2) Execution quality data (Article 44(5) of the MiFID Level 2 Directive). (3) MiFID complex vs. non-complex financial instruments for the purposes of the Directive’s appropriateness requirements. (4) Definition of personal recommendation. (5) Supervision of tied agents and related issues. (6) MiFID options and discretions.
  • Equity markets. The main topics covered in this consultation paper are: (1) Pre-trade transparency regime for regulated markets and multilateral trading facilities. (2) Definition of and obligations for systematic internalisers. (3) Post-trade transparency regime. (4) Application of transparency obligations to equity-like instruments. (5) Regulatory framework for consolidation and cost of market data. (6) Regulatory boundaries and requirements, inconsistencies which may have impacted the level playing field. (7) MiFID options and discretions.
  • Transaction reporting. The amendments proposed in the consultation paper focus on: (1) The introduction of a third trading capacity (riskless principal). (2) Collection of client and meaningful counterparty identifiers. (3) Standards for client and counterparty identifiers. (4) Client ID collection when orders are transmitted for execution. (5) Transaction reporting by market members not authorised as investment firms.

The deadline for comments on the consultation papers is 31 May 2010.

CESR has also published a letter from the Commission requesting additional information for the MiFID review. In a number of cases, the requests have been addressed by the proposals in the consultation papers. However, in some cases CESR will launch a subsequent consultation on very specific areas.

In particular, CESR will develop further details for its proposal on the non-equity markets transparency regime which was published in July 2009. CESR is also analysing the criteria for and the level of standardisation necessary to achieve a higher degree of derivatives trading on organised platforms. Consultations on these two work streams will be published this Spring.

In the area of investor protection and intermediaries, CESR will also consult on certain aspects of the client classification regime on the basis of the additional questions set out in the Commission’s letter. A consultation paper is also likely to be published in relation to some of the questions regarding transaction and position reporting.

CESR will be holding a public hearing on 17 May 2010 at its offices in Paris. An agenda for the hearing will be published shortly on CESR’s website. CESR intends to publish 6 feedback statements for the three consultation papers and provide its final advice to the Commission by 31 July 2010.

View CESR Technical Advice in the context of the MiFID review - Investor Protection and Intermediaries , 13 April 2010

View CESR Technical Advice in the context of the MiFID review - Equity Markets, 13 April 2010

View CESR Technical Advice in the context of the MiFID review - Transaction Reporting, 13 April 2010

View CESR begins the process to overhaul MiFID by consulting on policy options, 13 April 2010

View Commission letter: Request for additional information from CESR in relation to the review of MiFID, 13 April 2010