The Commission published in October 2011 a proposed directive and regulation to amend MiFID (MiFID II).

The proposals include (i) creation of a new type of trading venue within the regulatory framework, the organised trading facility (OTF), capturing all forms of organised trading that do not match existing categories; (ii) significantly increased regulation of commodities trading, including introducing a position reporting obligation and powers for regulators to intervene in trading activity; (iii) new powers for regulators to ban or restrict types of financial products; (iv) new safeguards on algorithmic and high frequency trading activities (mainly to address market volatility); (v) a new regime for 3rd countries which abolishes the UK’s overseas person exemption and replaces it with a requirement for overseas firms providing services into Europe to obtain a form of authorisation and (vi) new pre and post trade transparency rules for non-equity products, including bonds and commodities, similar to the transparency rules which apply to regulated equity markets.

Timing: MiFID II is currently subject to negotiation between the European Parliament and the Council of the EU. ESMA will need to produce a large number of related Level 2 measures. It is not anticipated that the implementation date will be before 2015.