The European Commission has proposed a one-year extension to the application date of its revised Markets in Financial Instruments Directive, better known as MiFID II, a comprehensive slate of unified regulations across member states for securities markets and investment firms.
The new implementation date, if approved by member states, will be Jan. 3, 2018. This delay “is to take account of the exceptional technical implementation challenges faced by regulators and market participants,” a statement says.
“The reason for the extension lies in the complex technical infrastructure that needs to be set up for the MiFID II package to work effectively,” the proposal adds. “The European Securities and Markets Authority (ESMA) has to collect data from about 300 trading venues on about 15 million financial instruments. To achieve this result, ESMA must work closely with national competent authorities and the trading venues themselves. However, the European Commission was informed by ESMA that neither competent authorities, nor market participants, would have the necessary systems ready by 3 January 2017, the date by which the MiFID II package was initially scheduled to become operational. In light of these exceptional circumstances and in order to avoid legal uncertainty and potential market disruption, an extension was deemed necessary.”
A period of 30 months between the adoption and the entry of application of MiFID II was already foreseen to take into account its complexity. The extension “is strictly limited to what is necessary to allow the technical implementation work to be finalized and will not have an impact on the timeline for adoption of the 'level II' implementing measures under MiFID II/MiFIR. The European Commission will proceed with that adoption irrespective of the new MiFID II compliance date.
MiFID II aims to improve upon its previous iteration by: ensuring that trading takes place on regulated platforms; introducing rules on high frequency trading; improving the transparency and oversight of financial markets—including derivatives markets—and addressing the issue of price volatility in commodity derivatives markets; improving conditions for competition in the trading and clearing of financial instruments; and strengthening the protection of investors by introducing “robust organizational and conduct requirements.”