22 December 2014

ESMA published initial cost-benefit-analysis on MiFID II proposals

A full and all-encompassing CBA will follow together with the publication of the final technical standards on MiFID II.

One of the objectives of the proposed draft RTS is to develop an exhaustive list of information to be provided to the relevant competent authority by an applicant investment firm, when requesting authorisation to provide investment services and/or the performance of investment activities. The aim is to set up a harmonised, common list of information that provides legal certainty, clarity and predictability with regard to the authorisation process and to the supervisory decision.

Whenever market practices are above what is being required by MiFID/MiFIR, current market practices will be taken into consideration to assess costs and benefits. However, in practice, it may sometimes be difficult to dissentangle the effects of the Level 1 provisions, for which an impact assessment covering the general aspects of the Directive has been already performed and published by the European Commission, and the effects of the Level 2 provisions.

MiFID II replicates the provisions of MiFID under which a competent authority must refuse the authorisation of an investment firm where it would not be in a position to efficiently exercise its supervisory functions. Those provisions become all the more relevant and critical as the investment firms, and more globally, the market structure landscape experiences a higher level of corporate activity, and where multiple business activities, including investment services, may be included in the same group of undertakings. MiFID II therefore empowers ESMA to develop RTS to further specify the obstacles that may prevent the effective supervision of firms.

Consideration of the future landscape of markets in financial instruments is particularly important. Under MiFIR, the scope of financial instruments subject to identifying reference data requirements defined has been substantially broadened and diversified. In the Discussion Paper, ESMA suggested a list of possible reference data fields per category of financial instruments whereby the categories were established according to the ISO 10962 (2001 version) standards (CFI classification). However, taking into consideration the expanded scope of MiFID II that will encompass a wider diversity of financial instruments, ESMA acknowledges the challenge of classifying all possible categories of financial instruments within the same set of categories as specified in the DP

Press release

Consultation Paper

Full Cost-benefit-analysis (CBA)

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