It has now been 3 months since MiFID II came into effect, on 3rd January 2018. The impact to many Investment Firms has been significant: For example, the “research unbundling” part of the rules has led to changes in the research industry. This story by Mark Cobley on the Financial News web site reports on the departure of a well known research analyst from the industry due to MiFID II.
The days before the start of MiFID II saw several temporary exemption from the”open access” rules being given to certain trading venues and CCPs. These rules require that venues permit different CCPs to clear their products and vice versa. ESMA has now published this centralised list of the entities to which the exemption has been granted. In the meantime, the centralised list of venues and SIs (see here) does not yet cover all entities.
This article on the Mondaq web site by Barbara Jamieson of Brodies LLP looks at progress made in the UK. In Cyprus, CySec are taking a proactive stance to MiFID II, having sent letters to unregistered entities that they believe should have been registered, as well as looking at transaction data. This article by Ron Finberg on the Cappitech web site provides more details.
Most energy and commodity market participants have used an exemption, such as the Ancillary Activity exemption, to remain outside of many of the above rules. For those companies, having notified their National Competent Authority of the intent to use the exemption, the focus has been on complying with the position limits and reporting regimes. The reporting regime in particular has caused some issues, which most companies are working through. ESMA also issued an updated Q+A on the topic last week (see here). The issuing of a paper on the use of algorithmic trading in financial instruments by the FCA (see here) reminded the industry that there are requirements for non investment firms on this side too.
Those companies who have become Investment Firms not only have to deal with the full extent of MiFID II, but also other rules such as EMIR and CRD IV (although the latter offers a partial carve out until 2020 for some rules). The prudential regime is also changing as highlighted in this article on the International Banker web site.
Whatever the status, it will be interesting to see the full extent of the rules take effect over the coming months. All market participants will need to keep an eye on announcements, changes and the interactions with other rules over the coming months.