MiFID II: the next step presentation
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Another 1500 pages of regulatory standards and commentary on MiFID II has been released. Our briefing will help you get up to speed.
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MiFID II: the next step presentation
- 1. MiFID II: the next step Fiona Richardson and Mark Spiers November 2015
- 2. 2 What we are covering today
- 3. Where are we now? 2014 2015 2016 you are here Legislation MiFID II 3/1/17 Level2AdvicetoEC 19/12/14 RTStoEC 28/09/15 FCAMarketIssues ConsultationPaper Due12/15 FCADiscussionPaper 26/3/15 Level1entryintoforce 2/7/14 Level2inOJ Expected3/15 ITStoEC Dueby3/1/16 NationalTransposition Due3/7/16 FCAConduct ConsultationPaper Due3/15 Level2AdoptedbyEC Expected14/12/15 3
- 4. FCA Authorisation 4 MIFID II No longer exempt? OTF? Data Provider? Jan 2016 Authorisation process set out Q1 2016 Forms available on FCA website Apr 2016 Pre application meetings Apr 2016 Gateway for draft applications open 3 Jul 2016 Deadline for applications
- 5. Recap on the levels of MiFID 5 Level 1 – Framework Legislation • Delegated and Implementing Acts Level 2 – Implementing Measures • Implementing Technical Standards and Regulatory Technical Standards Level 2.5 – Technical Standards • ESMA issue non-binding guidance on the meaning of the Levels 1 and 2 • National regulators comply or explain Level 3 – Regulatory convergence • Enforcement action by EC for failure to implement or inconsistent implementation Level 4 – Enforcement of Directive Recast MiFID MiFIR MiFID II you are here
- 6. Technical Standards 6 Technical Standard Topic Subject RTS 1 Transparency Equity Transparency RTS 2 Non- Equity Transparency RTS 3 Volume cap mechanism RTS 4 Derivative trading obligation RTS 5 Derivatives that have a direct, substantial and foreseeable effect in the EU RTS 6 Microstructural Algorithmic trading, providing direct electronic access and acting as general clearing members RTS 7 Requirements on RMs, MTFs and OTFs enabling or allowing algorithmic trading through their systems RTS 8 Market making agreements and market making schemes RTS 9 Ratio of unexecuted orders to transactions RTS 10 Requirements to ensure co-location and fee structures are fair and non-discriminatory RTS 11 Tick size regime RTS 12 Determination of a material market in terms of liquidity relating to trading halt notifications RTS 13 Data Publication and Access Authorisation, organisational requirements and the publication of transactions for data reporting services providers RTS 14 Data disaggregation RTS 15 Access in respect of central counterparties and trading venues RTS 16 Access in respect of benchmarks Technical Standard Topic Subject RTS 17 Trading Venues Admission of financial instruments to trading on regulated markets RTS 18 Suspension and removal of financial instruments from trading ITS 19 Content and format of the description of MTFs and OTFs RTS 20 Commodity Derivatives Criteria for establishing when an activity is to be considered to be ancillary to the main business RTS 21 Methodology for the calculation and the application of position limits for commodity derivatives traded on trading venues and economically equivalent OTC contracts RTS 22 Market Data Reporting Transaction reporting obligations RTS 23 Financial instruments reference data RTS 24 Maintenance of relevant data relating to orders in financial instruments RTS 25 Clock synchronization RTS 26 Post Trading Issues Obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing RTS 27 Best Execution Quarterly report by Trading Venues, SIs, MMs and other liquidity providers RTS 28 Annual report by investment firms to clients (buy-side)
- 7. Remember the hopper? 7 MiFID II Trade Transparency Derivative Trading Information to Clients Telephone Recording Suitability Appropriateness Remuneration Fair, Clear and not Misleading Conflicts Product Governance Record Keeping Advice Client Assets Complaints Compliance Inducements Underwriting and Placing Eligible Counterparties Client Agreements Algo and HF Trading Product Intervention Transaction Reporting Best Execution Reporting
- 8. Best Execution Transaction Reporting Algo and High Frequency Trading
- 9. Best Execution 9 RTS 27 Quarterly report by Trading Venues, SIs, MMs and other liquidity providers RTS 28 Annual report by investment firms to clients
- 10. Transaction Reporting 10 RTS 22 Transaction reporting obligations RTS 23 Financial instruments reference data RTS 24 Maintenance of relevant data relating to orders in financial instruments RTS 25 Clock synchronization
- 11. Algo and HF Trading 11 RTS 6 Algorithmic trading, providing direct electronic access and acting as general clearing members RTS 7 Requirements on RMs, MTFs and OTFs enabling or allowing algorithmic trading through their systems RTS 8 Market making agreements and schemes RTS 9 Ratio of unexecuted orders to transactions RTS 10 Fair and non-discriminatory co-location and fee structures RTS 11 Tick size regime RTS 12 Determination of a material market in terms of liquidity relating to trading halt notifications
- 13. There is a lot of content in MiFID II Don’t wait for FCA rules or even the final EU legislation Have you started yet? 13 • read • ascertain gaps • develop solutions • identify opportunities Analysis and planning • change • test • train • client contact Implement Yourproject
- 14. • What rules apply to my business? • Have they changed from MiFID I? • If so, do I need to take action? • What exactly do I need to do, and what is the effort needed? • Who is going to do it? How do I make them? Approaching your project line by line 14
- 15. Management and business buy-in • MiFID II is something you have to do yourself, not something that can be done to you by consultants • You and the whole business must be prepared to embrace the change • Senior Management must support achieving compliance Clear objectives and deliverables • Proper project governance • Clear understanding of what is compliance • Each action needs to be clearly articulated • Ownership and robust tracking of compliance • Excellent reporting Critical success factors 15 “Expect questions from clients and regulators”
- 16. 16 Using Bovill to kick start your project Our ToolKit
- 17. Questions 17