Technical Standards

European Parliament Votes to Postpone MiFID II Implementation until January 2018

Posted on

On June 7, 2016, the European Parliament published a press release announcing that it has voted to postpone the implementation of MiFID II (the MiFID II Directive (2014/65/EU)) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR)) until January 3, 2018. This grants member states a year’s extension on the original July 3, 2016 deadline to transpose the legislation. The extension was triggered by the European Commission and the European Securities and Markets Authority’s (ESMA) delay in producing the necessary technical standards.

MiFID II intends to close the gaps left by MiFID I. Following the financial crisis, it was introduced to create a single market for investment services and activities, with the aim of improving the competitiveness of EU financial markets. The Parliament, through MiFID II, seemingly aims to introduce: (i) a dedicated regime for the treatment of package transactions with regards to pre-trade transparency obligations; (ii) clarification for the own-account exemption for corporate end-users and securities financing transactions, which are excluded from MiFID transparency obligations; and (iii) a technical cross-referencing issue between the Prospective Directive (2003/71/EC) and MiFID II.

On June 8, the Parliament proceeded to publish the provisional edition of: (i) the text of the legislative proposal for a Directive amending the MiFID II Directive as regards certain dates; and (ii) the text of the legislative proposal amending the 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.

It now remains for the proposals to be formally adopted by the Council, following which they will be published in the Official Journal of the EU (OJ) and enter into force in line with the timing stipulated in the legislation.

EBA Publishes Draft Technical Standards on Capital Requirements for CCPs

Posted on

On September 26 the EBA published its final draft regulatory technical standards (RTS) which specify the capital requirements for central counterparties (CCPs) under the EMIR Regulation.

The draft RTS provide that a CCP should hold capital, including retained earnings and reserves, that is at all times at least able to cover:

  • o    overall operational and legal risks;
  • o    otherwise uncovered credit, counterparty credit and market risks; and
  • o    business risk (based on a CCP’s own estimate and subject to the approval of the body that regulates the CCP).

A CCP should also hold an additional amount of capital that is able to cover the CCP’s gross operational expenses during an appropriate time span for winding down or restructuring its activities.

The draft RTS will now be sent to the European Commission who have until December 31 to decide whether to endorse them. The RTS, once endorsed, will be directly applicable across the European Union.