MiFID is the abbreviation for “Markets in Financial Instruments Directive”. The directive currently in force is the first version. This should soon be revised to make way for MiFID 2, which should come into force in 2018, making it possible to optimise transparency in the financial markets
MiFID 2 is expected in January 2018
MiFID 2, which replaces MiFID 1, aims to improve the transparency of financial markets. This new version of the Markets in Financial Instruments Directive will shed light on some obscure points concerning OTC markets, which have recently undergone very significant changes.
MiFID 2 is highly anticipated, but it will take until January 3, 2018 to discover its content, one year longer than originally planned. The information has been confirmed by Brussels.
It should be noted that this postponement does not happen by chance. This delay is due in particular to the rather complex nature of the applicable rules. To make markets more transparent, it is necessary to analyse data from 300 operators (and involving around 15 million financial instruments).
Given the extent of the “work”, the Esma or European Securities and Market Authority, which is in charge of supervising stock markets in Europe, considered that MiFID 2 could not be ready within the expected time frame. Hence the postponement…
Level 2 technical standards
In addition to the analysis of the above-mentioned data, the postponement of the release of MiFID 2 is also linked to the level 2 technical standards that must be approved by the European Commission. The related documents were received in Brussels, on the initiative of Esma. They will then have to go to the level of Parliament, which will analyse them before accepting or opposing them.
We are waiting for a final text on this area to be published so that things can progress well. In any case, deciding to postpone MiFID 2 was not easy, but it is an option that seems inevitable.
What’s going to happen
It should be noted that Brussels had almost only partially postponed the release of MiFID 2, including a two-stage application, some obligations in 2017 and others a year later, in 2018. Nevertheless, the decision was made to unveil the MiFID 2 in one go, for January 2018. It should be stressed that the postponement, which will be amended successively by the Council of Ministers and the European Parliament, should not imply any change in the substance of the project.
However, there are still some challenges to be addressed, including the criteria that determine the liquidity of a security and the limits to pre- and post-trade transparency. There are also the exceptions that apply to market participants who process raw materials. In any case, the MiFID 2 should be ready for early January 20108.