NCAs

Commission Extends by One Year the Application Date for the MiFID II Package

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On February 10, the European Commission published a press release announcing it is proposing a one year extension to the application date of the MiFID II legislative package (that is, the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR).

To implement its proposal, the Commission has published:

  • A legislative proposal for a Directive amending the MiFID II Directive as regards certain dates.
  • A legislative proposal for a Regulation amending MiFIR, the Market Abuse Regulation (Regulation 596/2014) (MAR) and the Regulation on improving securities settlement and regulating central securities depositories (CSDs) (Regulation 909/2014) (CSDR) as regards certain dates.

Member states must transpose the MiFID II Directive by July 3, 2016. Both the MiFID II Directive and MiFIR are scheduled to apply from January 3, 2017. Under the Commission’s proposal, national competent authorities (NCAs) and market participants will have an additional year to comply with MiFID II. The proposed new application date is January 3, 2018.

The Commission is proposing the application date extension as a result of the complex technical data infrastructure that needs to be established so that MiFID II can operate effectively. As a result of significant challenges in collecting the data that is needed, ESMA informed the Commission in October 2015 that neither NCAs nor market participants will have the necessary systems ready by January 3, 2017. As a result, ESMA has concluded that a delay is unavoidable.

In the light of these exceptional circumstances, and to avoid legal uncertainty and potential market disruption, the Commission considers an extension of the MiFID II application date is necessary.

ESMA Publishes Peer Review Report on Compliance with SSR Regarding Market Making Activities

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On January 5, the European Securities and Markets Authority (“ESMA”) published a peer review report aimed at assessing how national competent authorities (“NCAs”) apply the exemption for market making activities foreseen in Article 17 of the Short Selling Regulation (SSR).  The report reviewed whether the NCAs are applying the general principles and criteria of eligibility for the exemption in compliance with the corresponding ESMA Guidelines and to identify good practices.

The report concluded that all NCAs have dedicated resources and have designed processes to handle the notification of exemptions and the notification functions are staffed with capable, knowledgeable and committed staff and that there are a number of approaches taken by NCAs.

The report highlighted some areas for concern, including: NCAs are not properly seeking assurance, in advance, that market makers seeking an exemption comply with the organizational requirement of the ESMA Guidelines; and many NCAs are too reliant on monitoring by trading venues rather than monitoring by the NCAs themselves. Report.

ESMA Compliance Table Relating to MiFID Remuneration

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On October 7, the European Securities and Markets Authority (ESMA) published a guidelines compliance table relating to its guidelines on remuneration policies and practices under the Markets in Financial Instruments Directive (MiFID).

The table lists the jurisdictions whose national competent authorities (NCAs) have informed ESMA whether they comply or intend to comply with the guidelines. The only jurisdiction in the table listed as not complying is Germany. There is a comment in the table that states that the German NCA (BaFin) does not entirely comply with the guidelines insofar as it excludes from their scope any remuneration agreed within the scope of application of collective agreements. Guidelines Compliance Table.