The increase in the regulation of securities and financial markets since 2008 will reach its peak in 2018 (with the revised set of Basel IV regulations arriving only, hopefully, in 2027).
In the past few years, the EU has pushed through a reform agenda that strengthens both conduct and prudential regulation. This movement, together with the aim to build an integrated EU financial market, gave rise to a prolific amount of legislation: among which, most recently, are the Markets in Financial Instruments Directive II (Mifid II), the Markets in Financial Instruments Regulation (Mifir) and the revised Payment Service Directive (PSD2).
The effects of this legislation are only now coming to fruition as EU member states start implementing the new rules.
A cornerstone of EU financial services law, Mifid II/Mifir entered into force in January 2018 strengthening investor protection and aiming to improve the functioning of financial markets to make them more efficient, resilient and transparent. In the words of the European Securities and Markets Authority (Esma), they 'ensure fairer, safer and more efficient markets and facilitate greater transparency for all participants'. It will take substantial efforts by banks and markets to ensure compliance with the new set of rules, specifically with respect to how organisations collect and manage their information data. Mifid II should have been transposed into national law by January 3 2018. However, Portugal, like other EU member states, has not yet transposed the framework though this is expected to occur any time soon.
PSD2 should have been implemented into national law and regulation across the EU by January 13. This will enable bank customers, both consumers and businesses, to use third party providers to manage their finances, with banks being obliged to provide these third-party providers access to their customers' accounts through open application programme interfaces (APIs). This will create new competition in one of the core businesses of banks, but also new market opportunities to offer new services and capture costumers. The transposition of this directive has not yet occurred but the relevant legislative procedures are underway and are expected to be finalised during the second quarter of 2018.
Interesting and demanding times lie ahead for EU banks and financial markets but it is possible that the full effects of the new rules will only begin to be felt during the second half of 2018.
|Bruno Azevedo Rodrigues||Frederico Félix Alves|