MiFID II Directive

EC Publishes Draft Delegated Regulations under MiFiD II and IDD on Sustainable Finance

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On January 4, the European Commission published the following draft Delegated Regulations which are designed to ensure insurance distributors and investment firms take environmental, social and governance (“ESG“) issues into account when advising customers:

  • a Delegated Regulation amending Delegated Regulation (EU) 2017/565 as regards to the integration of ESG considerations and preferences into investment advice and portfolio management under the MiFID II Directive (2014/65/EU); and
  • a Delegated Regulation amending Delegated Regulation (EU) 2017/2359 as regards to the integration of ESG considerations and preferences into investment advice for insurance-based investment products (“IBIPs“) under the Insurance Distribution Directive ((EU) 2016/97) (“IDD“).

The draft Delegated Regulations have been produced under Articles 24(13) and 25(8) of the MiFID II Directive, and Article 30(6) of the IDD, respectively. Publication follows a consultation run in May 2018. Although there was generally strong support to enhance the focus on non-financial objectives within the investment process, some stakeholders were reluctant to change their recently-implemented MiFID II or IDD processes. However, the Commission is convinced of the urgency of moving ahead with its sustainable finance proposals. The Commission also believes the proposed timeline for application of the draft Delegated Regulations provides sufficient flexibility as, although each explanatory memorandum states that the draft Delegated Regulations provide for an 18-month transition period, the draft legal texts themselves state that they will apply 12 months after they come into force.

The Commission can only officially adopt the draft Delegated Regulations once the new disclosure provisions for sustainable investments and sustainability risks have been agreed at the EU level. However, in a press release, it advised that publication of the drafts should enable firms to start preparing to take ESG considerations and preferences into account.

The Commission issued a call, in August 2018, for technical advice from EIOPA and ESMA relating to its sustainable finance proposals.

Once adopted by the Commission, the draft Delegated Regulations will enter into force twenty days after publication in the Official Journal of the EU (“OJ“), unless the European Parliament or the Council of the EU objects.

Council of the EU Publishes Notes on Proposed Regulation and Directive for Supervision Investment Firms

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On January 4, the Council of the EU published the following notes from the Council Presidency to its Permanent Representatives Committee (“COREPER“) relating to the European Commission’s proposed Regulation and Directive establishing a new framework for prudential requirements for investment firms:

  • A note (5022/19) setting out the Presidency compromise proposal on the proposed Directive on the prudential supervision of investment firms and amending the CRD IV Directive (2013/36/EU) and the MiFID II Directive (2014/65/EU) (2017/0364 (COD)) (the proposed Investment Firms Directive (“IFD“)).
  • A note (5021/19) setting out the Presidency compromise proposal on the proposed Regulation on the prudential requirements of investment firms and amending the Capital Requirements Regulation (Regulation 575/2013) (“CRR“), the Markets in Financial Instruments Regulation (Regulation 600/2014) (“MiFIR“) and the EBA Regulation (Regulation 1093/2010) (2017/0358 (COD)) (the proposed Investment Firms Regulation).

The previous compromise proposals were published in October 2018. The notes do not explain the changes that have been made in the latest revised versions. However, it appears that new text is marked in underlined bold and deletions are indicated in strikethrough.

Corrigendum to Delegated Regulation Relating to Passporting Under MiFID II Published in OJ

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The Official Journal of the EU (OJ) has published a corrigendum to Commission Delegated Regulation ((EU) 2017/1018) supplementing the MiFID II Directive (2014/65/EU) with regard to regulatory technical standards (RTS) specifying information to be notified by investment firms, market operators and credit institutions.

The corrigendum makes the following minor change to the text of article 5(b) of the version of the Delegated Regulation published in the OJ:

“For: “(b) a short description of the appropriate arrangements to be in place and the date from which these arrangements will be provided in the host Member State;”

read: “(b) a short description of the arrangements and the date from which those arrangements will be provided in the host Member State;”.”

The Delegated Regulation was made under article 34(8) of the MiFID II Directive.

Amendment to MiFID II – European Commission Adopts Delegated Regulation Amending Systematic Internaliser Definition

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The European Commission published the text of a Delegated Regulation amending Delegated Regulation (EU) 2017/565 in relation to the specification of the definition of systematic internalisers on August 28, 2017.

The Delegated Regulation (EU) 2017/565 supplements the MiFID II Directive (2014/65/EU) in relation to the organizational requirements and operating conditions for investment firms and defined terms.

Following perceived ambiguities in relation to the meaning of “trading on own account when executing client orders,” the Commission launched a public consultation on the Delegated Regulation in June 2017. Concerns raised during the consultation have been addressed by the introduction of a new recital and amending article 16a, which clarifies the scope of matching arrangements that are considered dealing on own account.

The Delegated Regulation was adopted on August 28, 2017, and will now need to be considered by the Council of the EU and the European Parliament. Provided neither of the Council or Parliament objects, the Delegated Regulation will be published in the Official Journal of the EU and will enter into force on the day after its publication.

ESMA Publishes Guidelines on the Definitions of Commodity Derivatives Under MIFID

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On May 6, 2015, the European Securities and Markets Authority (ESMA) published guidelines (ESMA/2015/675) on the definitions of commodity derivatives and their classification under C6 and C7 listed in Section C of Annex 1 to the Markets in Financial Instruments Directive (2004/39/EC) (MiFID).

The guidelines will apply to national competent authorities from August 7, 2015 and are intended to apply until the MiFID II Directive comes into force on January 3, 2017. The guidelines will clarify the definitions by specifying, in particular, what is meant by “physically settled” and confirming that forwards traded on a regulated market or multilateral trading facility (MTF) fall within the scope of MiFID.

ESMA Publishes Final Technical advice on the MiFID II Directive and MiFIR

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On December 19, 2014, the European Securities and Markets Authority (ESMA) published final technical advice (ESMA/2014/1569) to the European Commission and a consultation paper (ESMA/2014/1570) on the MiFID II Directive (2014/65/EU) and MiFIR (the Markets in Financial Instruments Regulation (Regulation 600/2014).

The consultation paper includes draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the MiFID II Directive and MiFIR.  The consultation paper invites responses to the draft RTS and ITS by March 2, 2015, and responses will be used to finalise the draft RTS which will be sent to the Commission for endorsement by the middle of 2015.  Technical Advice.  Consultation Paper.

ESMA Publishes Technical Advice on MiFID II

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The European Securities and Markets Authority (“ESMA“) published final technical advice on December 19 to the European Commission, and a consultation paper on the MiFID II Directive and the Markets in Financial Instruments Regulation (“MiFIR“).

The consultation paper includes draft regulatory technical standards and implementing standards under the MiFID II Directive and MiFIR. Consultation closes on March 2. The accompanying press release is found at the following link: press release.

Council of the European Union Publishes Compromise Proposals on MiFID, MiFIR and MAR

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The Presidency of the Council of the European Union has published compromise proposals on the:

  • MiFID II Directive (dated 31 August 2012);
  • MiFIR Regulation (dated 31 August 2012); and
  • The proposed regulation on insider dealing and market manipulation (MAR) (dated 3 September 2012).

These compromise proposals are marked up to show the changes made as against the previous versions.