The implementation of MiFID II/ MiFIR has been one of the most ambitious implementation exercises carried out by the industry in the past few years due to MiFID II/R overhauling existing regimes and addressing all investment services in all asset classes.
MiFID II/R has always been the cornerstone of the EU financial legislation for the following reasons:
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MiFID II/R defines the conditions upon which investment firms are licensed to provide investment services and the content of conduct of business rules they have to comply with;
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MiFID II/R defines trading venues and the conditions upon which trading venue operators can provide services;
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MiFID II/R defines financial instruments and covers all asset classes accessible to wholesale and retail investors.
The Associations consider that it remains questionable whether MiFID II/ MiFIR has met its objectives in increased and effective transparency. Market participants have constantly reported outstanding problems associated with the implementation of data and reporting rules and calibration of transparency since the full application date of the framework. Although NCAs and ESMA have been provided with feedback about all these deficiencies, the Associations note that no re-calibration has been seriously considered so far to make the regime more effective and based on an appropriate cost-benefit analysis.
The Associations strongly believe that the approach should be a ‘Refit’ of MiFID II/ MiFIR and that a complete re-write of the existing legislation would be inappropriate. Not only has MiFID II/R been implemented relatively recently but the industry, as well as regulators, are currently facing considerable uncertainty and implementation challenges associated with Brexit. As an example, where the framework is based on EU metrics (e.g. the systematic internaliser regime or calibration of the transparency regime), ESMA should concentrate on the impact of Brexit and the calibration of rules once UK data is no longer included in the calculation of the EU metrics.
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