As 3 July 2017 gets closer, and January 2018 is
also approaching rapidly, the regulators and the in-scope firms
across Europe are well advanced in their efforts for transposing
The missing pieces of the regulatory puzzle are
the majority of the 'Level 2' measures. These capture the
regulatory technical standards (RTS) and the implementing
technical standards (ITS)
adopted by the European Commission. The pending RTS (565-592/2017)
were published in the Official Journal of the European Union on 31
March 2017 and will enter into force as of 20 April 2017. The RTS
and the ITS will become mandatory starting from the date of
applicability of MiFID II and MiFIR thus giving further weight to 3
January 2018 as the implementation deadline.
The technical standards are binding requirements that will be
directly applicable in all Member States, respectively will become
part of national laws, and which deal with the technical
particularities of the new regime with the aim of supplementing or
implementing it. The Level 2 measures are adopted on the basis of
drafts prepared by ESMA, following consultations with the market
players, and set out tools for compliance with the key novelties
that the MiFID II regime brings to the market:
transparency (pre- and post-trade transparency)
organizational requirements for trading venues
data publication and access
Therefore, the fundamental questions concerning
compliance with the RTS, as faced now by banks, investment firms,
commodity traders and other affected entities, are not something
that their heads of legal or compliance departments can answer.
These are rather issues that the CEOs and CFOs should resolve: For
which strategy shall we opt? Are we able to adapt our IT System
with internal measures and at what cost? How do we budget such
massive IT investments?
BROADENING THE SCOPE OF REGULATED TRADING
The rules contained in these standards will bring the majority
of non-equity products, including bonds, which are not otherwise
regulated by MiFID II into a regulatory regime. They will impact
substantially OTC transactions; bringing them onto regulated
platforms. The technical measures will also introduce changes to
trading by setting out rules for best execution (RTS 27) and
transaction reporting (RTS 22). These, along with the MiFID II
prohibition on entering into 'title transfer collateral
arrangements with retail clients for the purpose of securing or
covering' their obligations (article 16 (10) of MiFID II) will
define the new boundaries for repos. Repos were recently used by
market players in CEE and SEE to attract clients as an alternative
to saving deposits and the low interests offered by these.
Despite the proximity of the transposition deadline - and with
certain exceptions, such as Austria, Poland, the Czech Republic and
Romania - the publications of draft laws in implementation of MiFID
II are still outstanding in many CEE and SEE Member States. Along
with the binding RTS addressed above, the national transposition
acts (if any) will have to be checked carefully against the
directly applicable regulations defining the terms of MiFID II,
particularly the Delegated Regulation No. 565/2017. Understandably,
the combination of local implementation of legislation and the
broad range of regulations which are EU harmonized and directly
effective, is a puzzle that is difficult to solve.
WOLF THEISS is ready to help you solve the puzzle and to adapt
your system to the MiFID II package.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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With effect from 18 April Jersey is introducing a new regime in respect of private funds - simplifying the regulatory regime, and extending the benefits of flexibility and speed across Jersey's private funds space.
This compendium is made up of two separate publications, which are available in French, English and German.
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