MiFID II, the wide reaching EU legislation that will impact the UK and European commodities markets from 3rd January 2018, is almost here! MiFID II - 'Markets in Financial Instruments Directive II' and its sister regulation MiFIR - ' Markets in Financial Instruments Regulation' will apply to individuals and institutions that provide services to third parties on a professional basis, market operators and data reporting services providing investment services or performing investment activities in the EU, including in the City of London.
Many existing trading venues which do not fall within the current requirements to be a MTF (Multilateral Trading Facility) will be 'caught' by the new concept of an OTF - an Organised Trading Facility - notably most electronic commodity derivative trading platforms whenever parties interact in a system that results in a contract for bonds, structured finance products, emission allowances or derivatives, including much OTC activity. Trade transparency, transaction reporting and the availability of market data, along with 'open access' are at the heart of MiFID II. For even the largest, most sophisticated financial institutions and trading houses, MiFID II introduces very significant changes.
Whether the UK negotiates a 'soft' of 'hard' Brexit or tumbles out the EU without a Brexit deal at all, it seems inevitable that to continue to provide services to EU counterparties the UK will have to implement MiFID II even after the UK exits the union.
The FCA which is the responsible MiFID II regulator in the UK, has encouraged firms to plan for MiFID II well in advance. Some have, others are doing so only now. As the FCA puts it "MiFID II is a wide-ranging piece of legislation and, depending on your business model, could affect a wide range of your firm's functions - from trading, transaction reporting and client services to IT and HR systems".
IY LEGAL is currently assisting a number of firms in the City of London to meet the requirements of MiFID II, including electronic platform providers which are seeking authorisation as MTFs and OTFs. We are advising clients on the scope and impact of MiFID II, how the new rules will impact their businesses and assisting them meet the new trading venue criteria.
If you would like to discuss MiFID II and how it might impact your business, please contact Andrew Iyer on: +44 207 1007714, or by email to: [email protected]
For more information about IY LEGAL and the legal services we can provide, please visit: www.iylegal.com.