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The update to the original MiFID reached a political agreement in January but was not formally passed until 15 April, enabling ESMA to create an industry consultation on how the regulation will be implemented in practice. ESMA hopes to publish the paper at the end of May, though it could slip to the first week of June.
The document is set to weigh in at 500-600 pages, covering a broad range of different topics, from equity market structure to new transparency rules for derivatives and fixed income, alongside retail investor protection measures and changes to the commodities market.
Following the results of the consultation, ESMA expects to publish draft rules within 2-3 months, meaning market participants should have greater certainty on what will be required to comply with MiFID II near the end of Q3 2014. However, some aspects of the political ruling may be difficult to achieve in practice, meaning ESMA would need to refer them back to the European Commission to make a judgment on how it should proceed.
ESMA said it has been increasing staff numbers significantly, doubling them in each of the last few years, in order to deal with the increased burden on MiFID II and the European market infrastructure regulation. It now has around 180 full-time staff as well as hiring consultants and working with member states’ national regulators.