The European Parliament and European Council (heads of European Union member states) agreed today "in principle" to updated rules for markets in financial instruments – so called MiFID II. This new regime is aimed, among other things, at requiring a shift in the trading of financial instruments to multilateral, regulated trading platforms; imposing a harmonized EU-wide system for position limits on commodity derivatives; and strengthening investor protection. Restrictions on certain high frequency trading will occur too.
Non-EU market access by third-country firms to professional and eligible counterparties will be based on an equivalence assessment of the third-country. A transitional period will apply for three years for this international aspect.
According to Michel Barnier, European Commissioner for Internal Market and Services,
"[t]hese new rules will improve the way capital markets function to the benefit of the real economy. They are a key step towards establishing a safer, more open and more responsible financial system and restoring investor confidence in the wake of the  financial crisis."
Specifically, the principal elements of the agreement are that:
Final language must now formally be adopted by the European Parliament and the Council (member states). Once adopted the elements of MiFID II (the relevant Regulation (MiFIR), the Directive (MiFID), and the necessary technical rules will be effective as of the same date. No schedule was provided today officially by the EC for these final actions.
For further information, see:
European Parliament Press Release:
Michel Barnier Statement:
See also for additional background:
The information contained in this article is not legal advice. For legal advice, please consult with your attorney. The information in this article is derived from sources believed to be reliable as of January 14, 2014, but no representation or warranty is made regarding the accuracy of any statement. To ensure compliance with requirements imposed by U.S. Treasury Regulations, Gary DeWaal and Associates LLC informs you that any U.S. tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Gary DeWaal and Associates may represent one or more entities mentioned in this article.
Gary DeWaal is currently Special Counsel with Katten Muchin Rosenman LLP in its New York office.
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