Economic and Monetary Affairs Committee negotiators struck a deal so that EU companies can access a diverse range of funding and support the post-COVID-19 recovery.
The agreement reached with the Council on targeted adjustments to the Markets in Financial Instruments Directive
(MIFID II) should facilitate economic recovery by removing unnecessary
administrative burdens while maintaining a balance between protecting
investors and keeping compliance costs low for firms. The changes apply
mostly to professional clients and eligible counterparties such as
insurers, pension funds, or public institutions.
The changes agreed by the negotiators on Wednesday include:
- Professional clients will no longer receive information on costs and
charges. They will however still receive information on investment
advice and portfolio management.
- Ex-post information on costs and charges should be supplied without
delay and clients should be able to receive such information over the
phone (or on paper if requested). Moreover, the client should be given a
breakdown of the costs prior to concluding a transaction.
- Retail clients will be able receive information in digital format
instead of on paper, but should be given at least eight weeks’ notice
and the choice to continue receiving information on paper or switch to a
digital format.
- Certain product governance requirements will no longer apply to
corporate bonds with “make-whole clauses” – which protect investors
against losses when an issuer opts for early repayment, by guaranteeing
them a payment equal to the net present value of the coupons. In
addition, financial instruments distributed to eligible counterparties
will be excluded.
- Commodity derivatives: some changes to the position limits regime,
including a new definition for agricultural commodity derivatives. This
definition clarifies that agricultural commodity derivatives include
fisheries as well as animal feed. For those agricultural commodities the
current strict regime will still apply, while less sensitive contracts
will enjoy a lighter regime.
MEPs also ensured that the Commission
will present if appropriate a proposal for a review of both the Market
in Financial Instruments Directive (MIFID) and the Regulation (MIFIR) by
31 July 2021 at the latest. It should consider issues related to market
structure, data, trading and post trading, research rules, rules on
payment to advisors, the level of professional qualifications of
advisers in Europe and client categorisation.
Quote
Markus Ferber
(EPP, DE) the lead MEP, said: “During the pandemic, many companies have
been bleeding equity and desperately need access to capital markets.
The targeted adjustments in the MiFID II Quick Fix will make it easier
for companies to tap into financial markets. We will get rid of red tape
for investment firms, while still protecting investors. With these
adjustments, we have made financial markets regulation more targeted and
have protected consumers.
We have also got rid of some
regulatory obstacles in the market for commodity derivatives. This will
be particularly helpful for innovative clean energy contracts that are
vital for the energy transition and the Green deal. In the long run,
making it easier to trade Euro-denominated energy derivatives will also
strengthen the Euro’s international standing.”
Background
This legislative proposal amending MiFID II is part of a set of measures (Capital Markets Recovery Package) to facilitate post-COVID-19 economic recovery, which includes also legislative proposals amending the Prospectus Regulation, the Securitisation Regulation, and the Capital Requirements Regulation.
ECON
© European Parliament
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article