The Markets in Financial Instruments Directive II (Mifid II) goes live on January 3 2018, just 15 weeks after this Report's publication. Despite this impending go-live date, and the fact that EU member states have already transposed the Directive's provisions into national laws and regulations (July 2017), the process of interpretation of the text and understanding its implications is still ongoing.
This Report provides a crucial glimpse into the way the Directive has been imported and interpreted in a number of countries and what private practice lawyers believe are the concerns of market participants in their jurisdictions.
One theme is clear: that the Directive will represent a paradigm shift in the financial markets. This is highlighted by lawyers and financial markets associations in Europe and beyond. It has the potential to profoundly impact the business of banks, asset managers, exchanges, Mifid firms and their counterparties and other financial market participants.
the Directive will represent a paradigm shift in the financial markets
Another clear theme is that the Mifid II texts are open to multiple interpretations and this has left open many questions, several of which are as yet unanswered. Furthermore, inside this Report, analysts warn that Mifid II may even result in less regulatory harmonisation within the EU itself. As national authorities have discretion over certain aspects of its implementation there is no guarantee of a common approach.
While there will be inconsistencies in the way Mifid II is implemented in the EU, perhaps the biggest unknown is outside the bloc where the Directive – a set of regulations aimed solely at EU firms – will have many unintended consequences. This in itself is evolving, as some commentators suggest that the Brexit negotiations are impeding a proper examination of how non-EU jurisdictions could attain equivalence with EU rules.
This Report aims to get into the details of some of these issues and shed light on concerns and differences in perspective. The aim of Mifid II is to bring more transparency to the market and security to its end-users. Only time (and effort) will tell whether the balance between the regulatory burden and its benefits has been correctly judged.
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