Esma launches consultation on MiFID reforms

The European Securities and Markets Authority has launched a consultation process around the implementation of MiFID II and MiFIR, as it seeks to turn the directive and regulation respectively into practical rules for industry participants.

The new rules are intended to increase investor protection and provide greater transparency to financial markets, to avoid a repeat of the financial crisis.

Transparency will be pushed on a greater range of asset classes. Derivatives will be required to trade on-exchange. Algorithmic and high frequency trading requirements will be tightened.

For retail investors the improvements are intended to come through changes such as limits on commission, creating conditions for access to independent financial advice, and placing stricter requirements on financial organisations.

Information about costs will become more transparent.

Esma said that the package of changes will mean it, in respect of its statutory role, will have to draft over 100 regulatory technical standards (RTS), and provide technical advice to the European Commission.

The Authority has therefore published two consultation related documents.

1. Consultation Paper on MiFID/MiFIR Technical Advice – ESMA needs to deliver this advice to the European Commission by December 2014 and is therefore subject to a condensed consultation process for this paper; and

2. Discussion Paper on MiFID/MiFIR draft RTS/ITS – this will provide the basis for a further consultation paper on the draft RTS/ITS which is expected to be issued in late 2014/early 2015.

Responses must be received by 1 August.

Steven Maijoor, ESMA chair, said: “The launch of today’s MiFID II/MiFIR consultation process is an important step in the biggest overhaul of financial markets regulation in the EU for a decade. The reform of MiFID is an integral part of the EU’s strategy to address the effects of the financial crisis and aims to bring greater transparency to markets and to strengthen investor protection. These changes are key to restoring trust in our financial markets.”

“We appreciate the magnitude of this exercise for stakeholders. We strongly encourage all those affected by these reforms to provide their views to ensure that we take them into account in our final proposals.”

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