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22 May 2014

ESMA consults on MiFID reforms


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ESMA launched the consultation process for the implementation of the revised Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). The closing date for responses to both papers is Friday 1 August 2014.


This is the first step in the process of translating the MiFID II/MiFIR requirements into practically applicable rules and regulations to address the effects of the financial crisis and to improve financial market transparency and strengthen investor protection. Steven Maijoor, ESMA Chair, said: “The launch of the MiFID II/MiFIR consultation process is an important step in the biggest overhaul of financial markets regulation in the EU for a decade. We appreciate the magnitude of this exercise for stakeholders. We strongly encourage all those affected by these reforms to provide their views to ensure that we take them into account in our final proposals.”

The main issues covered in the Discussion and Consultation Paper are divided into those addressing the structure, transparency and regulation of financial markets, and those aimed at strengthening investor protection. The main proposals in this area cover the following issues:

  • increasing pre- and post-trade transparency for many categories of instruments, e.g. shares, ETFs, certificates, bonds and derivatives, limitations to trade shares OTC and new obligations to trade derivatives on trading venues;
  • refining the definition of high frequency trading and direct electronic access and specifying the requirements for operating in the market using algorithmic techniques;
  • data publication and access – issues related to the development of the consolidated tape;
  • other organisational requirements for trading venues; and
  • commodity derivatives – new regulatory tools, including position limits.

The main proposals relating to the improved protection of retail investors include technical advice on:

  • new limitations on the receipt of commissions (inducements);
  • clearly distinguishing independent from non-independent advice;
  • requirements on the manufacture and distribution of financial products including target market and risk identification;
  • product intervention/banning - introducing powers for both ESMA and national regulators to prohibit or restrict the marketing and distribution of certain financial instruments; and
  • improved information on costs and charges – requirements to provide clients with details of all charges related to their investment (relating to both the investment service and the financial instrument provided) so they can understand the overall cost and its effect on their investment’s return.

The draft regulatory technical standards in the investor protection area relate to the authorisation of investment firms, passporting, and certain best execution obligations. ESMA will hold three public hearings about secondary markets, investor protection and commodity derivatives issues on Monday 7 and Tuesday 8 July. Further details on the hearings will be published on ESMA’s website.

Full press release

Discussion Paper on MiFID II/MiFIR

Response form to the MiFID II/MiFID Discussion Paper



© ESMA


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