1 MIFID II
1.1 ESMA updates manual on post-trade transparency and opinion on assessment of transparency waivers under MiFID II and MiFIR
On 16 October 2024, the European Securities and Markets Authority (ESMA) published an updated version of its manual on post-trade transparency under MiFID II1 and MiFIR2.
The manual, first published in July 2023, now provides new guidance on the naming convention of the fields in the post-trade transparency reports and makes amendments where necessary to accommodate the arrival into force of MiFIR II3 . Section 2 of the manual contains a summary table of updates.
On the same day, the opinion on the assessment of pre-trade transparency waivers for equity and non-equity instruments was also updated to emulate amendments made by MiFIR II. ESMA similarly updated its Q&As on transparency and market structure issues to align with the proposed changes.
The updated manual can be found here. The updated opinion can be found here.
ESMA's Q&As can be accessed here.
ESMA's Q&As can be accessed here.
1.2 ESMA consults on amendments to MiFID research regime
On 28 October 2024, ESMA launched a consultation on amendments to the research provisions under the MiFID II Delegated Directive4. The consultation comes as a response to the introduction of the Listing Act5, which enables joint payments for execution services and research for all issuers, notwithstanding the degree of market capitalisation of the issuers under the research.
The consultation paper puts forward proposals to ensure that:
- robust criteria are considered and applied in the annual research quality assessment; and
- firms comply with best execution requirements, irrespective of the remuneration methodology for joint payments for execution services and research.
The proposals within the consultation paper aim to align MiFID II with the new payment option offered by amending Article 13 of the MiFID II Delegated Directive. Therefore, the consultation mainly targets research providers, investment firms and investors.
Consultation feedback can be provided until 28 January 2025.
Once it has considered this feedback, ESMA aims to provide its technical advice to the European Commission in Q2 2025.
The consultation paper can be found here.
The press release can be found here.
1.3 ESMA and EIOPA publish letter relating to the EU Retail Investment Strategy
In April 2024, the Parliament adopted its negotiating position on the European Commission's proposal on the EU Retail Investment Strategy (RIS) while in June 2024, the Council adopted its finalised position on the proposal, paving the way for trialogue negotiations to begin in 2025.
On 13 November 2024 ESMA and EIOPA published a letter which they sent to the European Commission relating to the RIS (Letter). In that Letter they:
- recommended that the introduction of any investment/saving product for retail investors (as recommended by the Council in its conclusions on the capital markets union (amongst other topics)) be built into the current RIS proposal to avoid multiple revisions of the retail investment framework in a short period of time;
- advised that they did not agree with the proposals put forward by the Council and the Parliament on the RIS in which value for money benchmarks created by ESMA and EIOPA would be used only as a supervisory tool for national competent authorities instead of mandating fund management companies to use such benchmarks in their pricing processes to satisfy themselves that the fund will deliver value for money to investors (as had been put forward by the European Commission in its proposal)
- supported the Parliament's proposal to introduce an online comparison tool for PRIIPS to allow investors access to "an unbiased source of information on all relevant product features".
A copy of the Letter is available here.
1.4 ESMA publishes final reports concerning proposed amendments for the revised MiFID II and MiFIR regime
On 16 December 2024, ESMA published the following final reports:
- Final report on non-equity trade transparency, the
availability of information on a reasonable commercial basis and
revisions made under MIFIR II to MiFIR reference data: The
final report has been published following a consultation in May
2024 with proposals to amend RTS on the mandates for bonds,
structured finance products and emission allowances. The final
report includes (1) an RTS amending Delegated Regulation (EU)
2017/583 (RTS 2) and (ii) a new RTS on reasonable
commercial basis (RTS on RCB). ESMA has stated
that it continues to work on the review of Commission Delegated
Regulation (EU) 2017/585 (RTS 23) on supply of
reference data and will publish its final report separately at a
later stage next year.
The final report can be accessed here.
- Final report relating to equity transparency measures
under MiFIR II and MiFID III6 : Following a
consultation in July 2024, ESMA proposes amending technical advice
provisions under Commission Delegated Regulation (EU) 2017/567 as
well as amending Commission Delegated Regulation (EU) 2017/587
(RTS 1).
The final report can be accessed here.
- Final report on proposed amendments to certain
technical standards for commodity derivatives under MiFID
III: Following a consultation in May 2024, ESMA proposes
amendments to commodity derivatives provisions under MiFID II. The
changes propose amending Commission Delegated Regulation (EU)
2022/1299 (RTS on position management controls),
Commission Implementing Regulation (EU) 2017/10934 (ITS
4) and the article on position reporting in Commission
Delegated Regulation (EU) 2017/565 (MiFID II Delegated
Regulation).
The final report can be accessed here.
ESMA has submitted all three final reports to the European Commission. The Commission has three months to consider the reports and decide whether to endorse the proposed amendments.
1.5 ESMA publishes final report on technical standards related to Consolidated Tape Providers and DRSPs
On 16 December, ESMA published its final report on technical standards relating to consolidated tape providers and data reporting service providers (DRSPs) under the MiFIR review. This follows ESMA's consultation on the technical standards in May 2024.
The final report includes:
- Section 2 contains draft RTS on input/output data relating to the mandate under Article 22b of MiFIR requiring ESMA to specify: (a) the minimum requirements for the quality of transmission protocols, (b) the data to be disseminated by the consolidated tape provider, (c) what constitutes as close to real time as technically possible, and (d) the data to be transmitted to the consolidated tape provider. ESMA notes that there are changes from its original proposal, including regarding input data formats, consolidated tape provider's responsibilities on input data quality and latency requirements.
- Section 3 contains draft RTS on the revenue redistribution scheme relating to the mandate under Article 27h of MiFIR which requires ESMA to specify the methodology relied on by an equity consolidated tape provider to redistribute revenues to data contributors. Furthermore, the RTS also include the criteria under which the consolidated tape provider can suspend data contributors from revenue redistribution. The final RTS include several refinements to allow more flexibility to the consolidated tape provider in the application of such scheme.
- Section 4 contains draft RTS on clock synchronisation relating to the mandate under Article 22c of MiFIR which transposes the clock synchronisation requirement previously set out in MiFID II. ESMA's draft RTS specifies the level of accuracy to which business clocks must be synchronised, including UTC traceability requirements and maximum divergence levels. The final draft RTS largely aligns with the original proposal.
- Section 5 contains technical standards on the authorisation of DRSPs relating to the mandates under Articles 27d and 27db of MiFIR. This includes ESMA's proposal: (i) to amend the existing RTS 13 and the related ITS to exclude consolidated tape providers; and (ii) for a new RTS and a new related ITS specifically for the authorisation of consolidated tape providers. ESMA's approach from the consultation paper was largely maintained.
ESMA also published a feedback statement, available here, providing an overview of responses received from the consultation and clarifying aspects of the selection procedure for consolidated tape providers.
Following submission of the final report, the Commission has three months to consider the report and to decide whether to endorse the amendments to the RTS.
The final report can be accessed here.
1.6 ESMA consults on draft RTS for establishment of an EU code of conduct for issuer-sponsored research under the MiFID II
On 18 December 2024, ESMA published a consultation paper containing draft regulatory technical standards (RTS) for the establishment of an EU code of conduct for issuer-sponsored research.
The draft RTS were developed in response to Article 1(2)(a) of the Listing Directive7 which amends Article 24 of MiFID II including empowering ESMA to develop the RTS to establish the EU code of conduct under the new Article 24(3c) of MiFID II.
The draft RTS obliges investment firms to request necessary information from the issuer to ensure that the research was produced in compliance with the EU code of conduct (as set out in the Annex to the draft RTS). To that end, investment firms must use the label "issuer-sponsored research" when producing or distributing the compliant research partly or fully paid by the issuer to clients.
This consultation is open to feedback until 18 March 2025.
ESMA will consider the feedback, publish a final report and expects to submit the final draft RTS to the European Commission by 5 December 2025.
The consultation paper can be found here.
The press release can be found here.
2 INVESTMENT FIRMS REGULATION AND INVESTMENT FIRMS DIRECTIVE
2.1 EBA publishes final report and draft ITS on reporting of information on certain K-factor requirements under the Investment Firms Regulation
On 3 December 2024, the European Banking Authority (EBA) published a final report containing draft implementing technical standards (ITS) on reporting and disclosure requirements for investment firms under the Investment Firms Regulation8 (IFR).
This reporting framework has been amended to comply with incoming changes under the new Capital Requirements Regulation9 (CRR 3) and the Capital Requirements Directive10 (CRD VI) on capital requirements, in particular with regard to the reporting of information on certain aspects of the K-factor requirements. The draft ITS were developed to ensure consistency with supervisory reporting requirements for credit institutions under the CRR framework and investment firms under the IFR/IFD framework as well as to introduce minor technical amendments. The EBA did not introduce a consultation period on account of the fact that the changes within the draft ITS are relatively minor.
The draft ITS came into effect on 1 January 2025.
The final report can be found here.
3 EMIR
3.1 EMIR 3.0 enters into force
On 24 December 2024, the EMIR 3.0 Regulation entered into force, introducing revisions to the clearing requirements, risk mitigation requirements, reporting requirements, changes to the certain exemptions from the margining and clearing requirements and others (including the requirement for validation of initial margin models). While the majority of the EMIR 3.0 provisions apply from that date, certain requirements under the Regulation adhere to alternative implementation timelines.
The EMIR 3 Regulation can be found here.
The EMIR 3.0 Directive also amends the CRD IV Directive11 and the Investment Firms Directive12 with the aim of encouraging institutions and investment firms to take the necessary steps to adapt their business models to ensure consistency with the new requirements for clearing under EMIR 3.0 and to enhance overall their risk management practices.
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Footnotes
1. Directive 2014/65/EU
2. Regulation 600/2014/EU
3. Regulation 2024/791/EU
4. Commission Delegated Directive (EU) 2017/593
5. Comprising Regulation (EU) 2024/2809 and Directive (EU) 2024/2811
6. Directive (EU) 2024/790
7. Directive (EU) 2024/2811
8. Regulation (EU) 2019/2033
9. Regulation (EU) 2024/1623 CRR 3 amending Regulation (EU) 575/2013 (CRR)
10. Directive (EU) 2024/1619
11. Directive 2013/36/EU as amended
12. Directive (EU) 2019/2034
Originally published 27 January 2025
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.
