Fixnetix and the London Stock Exchange
In association with the MiFID Forum Present:
Anticipated Regulatory Changes in Europe: An Introduction
Dr David P. Doyle, EU Policy Advisor in Financial Services
Revised MiFID thrust: A Common Rules Book across the EU –
and no gaps!
• All actors encompassed: RM’s, exchanges, brokers/traders, MTF’s, IS’s, banks…
• Wider scope of asset classes: derivatives, commodities, energy trades, equity-like
instruments, OTC trades…
• Improved quality of post-trade information – standards, clarification of post-trade
• Improved timeliness of post-trade information – cost & quality of data consolidation , delays
in publication of data, shortening timeline for regular/deferred publication
• Consistency of pre-trade transparency rules for RM/MTFs in equity markets across the EU,
applicable to all actors in the RM, MTFs and Systematic Internalisers (SIs) and possibly
extended to other secondary markets
• Level playing field in all sectors and for all actors
• “Market regulators should have unlimited access to pre + post-trading information, while
data releases to wider market likely to be less onerous”.
EC Review Agenda
• Pre-trade transparency for Regulated Markets and MTFs
• Regime for Systematic Internalisers - definition and obligations of Sis
• Post-trade transparency
– improvement of the quality of post-trade information (standards, clarification of post-
trade transparency obligations)
– improvement of timeliness of post-trade information (shortening of timeline for regular
and deferred publications)
• Extension of MiFID transparency regime to equity-like Products
• Regulatory framework for consolidation of post-trade data
– Regime for Approved Publication Arrangements (APAs)
– Options for effective consolidation and reduction of cost of data
• Regulatory boundaries and requirements
– Alignment of MiFID requirements between RMs and MTFs
– Regulatory regime for crossing systems under MiFID
• MiFID options and discretions
European Commission request for technical advice on certain
provisions of the MIFID from CESR by July 2010 – Best Practice
and Investor Protection
Revised client classification regime distinguishing between the three types of clients:
- Retail Clients
- Professional Clients
- Eligible Counterparties
Questions being asked:
• Has CESR encountered problems in the provision of investment services to professional
clients or eligible counterparties?
• Can CESR further distinguish within the current broad categories of clients ("other
authorised or regulated financial institutions", "locals", "other institutional investors,
public bodies managing public debt ?
Reinforcing rules on Underwriting and Ancillary Services, the
processing and transaction processes associated with financial
instruments, especially in bonds and shares.
• The relationship between intermediaries and issuers
• The process of issuing and allocating the financial instruments
• The organisation of underwriting syndicates
• The pricing of financial instruments
Key Issues and Concerns Going Forward – 1
• The need for Alignment between MiFID, Packaged Retail Investment Products (PRIPs), Market
• Existing divergences: ensuring consistency in the application of MiFID across borders – the
role of the new Pan-EU regulator - ESMA
• Are all actors capable of adapting to a common disclosure regime in Europe?
• Timeframe: early 2011 for draft MiFID proposals – too short?
• Can market-driven solutions to future challenges work alongside the present regulatory
• How can market-players and regulators keep ahead of technological developments in the
• Growing powers of the European Parliament: how will MEPs react?
Key Issues and Concerns Going Forward -2
• OTC markets: how far can they be regulated? What are the risks?
• High frequency trading and the prospect of “flash crash” – in the scope?
• Clearing of OTC derivative trades: will the EU align with the US to avoid regulatory arbitrage?
• Should government and municipal entities be included in the scope and treated as “retail
Likely main regulatory changes
• Significant tightening of the MiFID rules on Equity trading
• MTFs and RMs treated equally, plus significant new rules on broker crossing/SIs.
• Pre and Post trade reporting likely to become faster and having more information included
e.g. underlying customer on post trade
• Equity market model being used as a template for regulation of other instruments
• OTC derivatives market likely to be significantly controlled and clearing introduced
• All new changes by Regulation not Directive, greater harmony across the EU
• More end customer protection
• New Pan European regulators including ESMA and the ESRB