MiFID II And MiFIR: New Rules On Markets In Financial Instruments


(Originally published on October 28, 2011)

On 20 October 2011, the European Commission published two proposals, one calling for an amendment ("MiFID II") to the Markets in Financial Instruments Directive ("MiFID") and another for the adoption of a new regulation (known as "MiFIR"). MiFID has been implemented in Belgium by two royal decrees: the Royal Decree of 27 April 2007 amending several Belgian acts, notably the Financial Sector Act of 2 August 2002 (Loi relative à la surveillance du secteur financier et aux services d'investissement/Wet betreffende het toezicht op de financiële sector en de financiële diensten), and the Royal Decree of 3 June 2007.

The proposals provide for the revision of certain MiFID rules and introduce new rules. The proposals must now be approved by the European Parliament and the Council. The intention is for MiFID II and MiFIR to enter into force in 2013. The resulting amendments to MiFID will subsequently have to be implemented into Belgian law, while MiFIR will be directly applicable in Belgium.

MiFID II and MiFIR contain a large number of general provisions, pursuant to which the European Commission and ESMA will set out more detailed rules. This means that the precise impact of the proposals is not clear at this stage.

Please find below an overview of the most important changes introduced by the proposals:

The scope of MiFID will be expanded: MiFID will also apply to the advised and non-advised sale of structured deposits by credit institutions (Article 1(2) MiFID II). MiFID will apply to all transactions (including spot transactions) in emission allowances (currently, only certain derivative transactions in emission allowances fall within the scope of MiFID) (Annex I, Section C(4) and (11) MiFID II). MiFID II clarifies that the MiFID rules also apply to investment firms and credit institutions selling their own securities at the time of issuance, when not providing advice (Article 4(1)(4) MiFID II). The scope of the existing exceptions for investment firms that deal on their own account will be narrowed. For instance, investment firms that deal on their own account will require a license if they are a member of a regulated market or MTF (Article 2(1)(d)(ii) MiFID II). The scope of the existing exceptions for entities active in commodity derivatives trading will be narrowed (Article 2(1)(i) and (k) MiFID II). Custody of financial instruments will become an investment service. Currently, this is only...

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