In November last year we blogged two articles concerning a possible delay to MiFID II and MiFIR. When addressing the Economic and Monetary Affairs Committee of the European Parliament, ESMA’s chairman discussed the implementation challenges that were faced by both firms and regulators. This was then followed by the European Parliament’s negotiating team informing the European Commission of its stance on a potential delay to MiFID II and MiFIR.
The Commission has now issued proposals granting Member State competent authorities and market participants one additional year to comply with MiFID II and MiFIR. The new date of application is 3 January 2018.
However, the delay will not have an impact on the timeline for adoption of the MiFID II and MiFIR Level II implementing measures. The Commission will proceed with their adoption irrespective of the new date of entry into application.
Jonathan Hill, Commissioner for Financial Services, Financial Stability and Capital Markets Union stated:
“Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II. We will therefore give people another year to prepare properly and make the necessary changes to their systems. Meanwhile, we are pressing ahead with the Level II legislation to implement MiFID II and expect to announce those measures shortly.”
Extending MiFID II’s and MiFIR’s date of application also has consequences for the applicability of the Market Abuse Regulation (MAR) and the Central Securities Depositories Regulation (CSDR). The Commission’s proposals note the following:
- as MAR is set to enter into application on 3 July 2016, there is already a provision in it, which ensures that before the original date of entry into application of MiFID II, concepts and rules of MiFID I will apply;
- in MAR the concepts and rules as set out in MiFID I should be used until the new date of application of MiFID II;
- MAR also refers to concepts that will be introduced by MiFID II, such as organised trading facilities (OTFs), small and medium-sized enterprises (SME) growth markets, emission allowances or auctioned products based thereon; and
- MAR provisions referring to OTFs, SME growth markets, emission allowances or auctioned products shall not apply until MiFID II’s new date of application.
The consequences for the CSDR are twofold. First, there are consequences for the application of the rules on settlement discipline to multilateral trading facilities (MTFs) applying for registration as SME growth markets in accordance with MiFID II. Specifically, these rules allow MTFs meeting the criteria for an SME growth market under MiFID II to apply a longer extension period for the settlement of transactions whilst their registration as an SME growth market under MiFID II is still ongoing. Second, in order to have a clear and coherent legislative framework for trading and settlement, the CSDR relies on many of the definitions and concepts of MiFID II. The Commission proposes that until the new date of application for MiFID II, the rules set out in MiFID I should be used.
The Commission’s proposals will now pass to the European Parliament and Council for their approval under the co-decision process. The timing for the approvals has not yet been set and, in the European Parliament, the process going forward will ultimately be the decision of the ECON Chair and Coordinators.
View Commission extends by one year the application date for the MiFID II package, 10 February 2016
View Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) No 596/2014 on market abuse and Regulation (EU) No 909/2014 on improving securities settlement in the European Union and on central securities depositories as regards certain dates (COM(2016) 57 final), 10 February 2016
View Proposal for a Directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments as regards certain dates (COM(2016) 56 final), 10 February 2016