Securities Markets (incl. MIFID2/MIFIR, EMIR)

Background

At the end of October 2011, the European Commission adopted proposals for a review of the Markets in Financial Instruments Directive (MiFID), splitting it into a Directive (MiFID2) and a Regulation (MiFIR). While a Directive provides Member States with a certain level of flexibility in implementation, a Regulation should be applied directly and without any national specificities. As in other pieces of EU financial services, the split reflects the need to achieve a uniform set of rules in some areas, while allowing for national specificities in others. MiFID2/MIFIR entered into force in January 2018.

The issues of most interest to Invest Europe have been the definition of professional client; the corporate governance provisions; the rules on inducements; and the third country provisions. MiFID rules also apply directly to Invest Europe members who operate under a MiFID license. 

From a third country perspective, MiFID authorises operators based in third countries whose rules are equivalent to the new EU rules to benefit from an “EU passport” when providing services to professionals. The harmonised regime applies only to the cross-border provision of investment services and activities provided to professional and eligible counterparties. For a transitional period of three years (from 2018) and then pending equivalence decisions by the Commission, national third-country regimes will continue to apply. 

Importantly, MiFID capital requirements, remuneration rules and its equivalence regime were reviewed under the so-called Investment Firms review, which will become applicable as of end 2020. 

Invest Europe Position

Although private equity was not at the core of the MiFID review it does have implications for the industry given the wide scope of this measure and the extent to which other pieces of legislation – including AIFMD – cross-refer to its provisions.

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