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MiFID 2 Updates

AUTHORs: Joe Beashel Services: Regulatory Risk Management and Compliance DATE: 24/01/2017

Further to the MiFID 2 Masterclass Series held by Matheson in September 2016, the European Commission has finalised a number of the Regulatory Technical Standards (“RTS”) and Implementing Technical Standards (“ITS”). The current status of the RTS and ITS as at 6 December 2016 is here.

There are now a total of 44 RTS and ITS most of which have been finalised and ESMA continues to publish various ‘Level 3’ measures such as its Q&A on Investor Protection topics (16 December 2016) and Q&A on MiFIR data reporting (20 December 2016) while the Securities and Markets Stakeholder Group provided ESMA with advice on ESMA’s draft guidelines on MiFID 2 product governance (16 December 2016).

Irish Implementation

Domestically, MiFID 2 is scheduled to be transposed by 3 July 2017 and to enter into application in January 2018. It is our understanding that the Department of Finance does not intend to circulate draft legislation for comment prior to 3 July 2017.

Separately, Michael Hodson who gave the Central Bank presentation at our September session has since been promoted within the Central Bank. Michael was appointed as Director of Asset Management Supervision, with effect from 1 January 2017. We wish him every success in his new role. Grainne McEvoy is now the Acting Director of Securities and Markets Supervision.

Industry Forum Proposal

With a year to go now firms will be getting into their MIFID implementation projects. Inevitably some interpretation and practical issues will arise. It was noted during our Masterclass that there was no dedicated MiFID 2 group though we are aware that some industry associations are looking at this legislation. We would be delighted to facilitate a group where firms can exchange issues and lobby the Central Bank on implementation issues.

If you are interested in participating in this proposed group, please get in touch with your usual Matheson contact.

EBA Consultation on Capital Requirements for Investment Firms

You may be aware that the European Banking Authority is currently seeking views on a new prudential regime for investment firms including MiFID firms. The consultation runs until 2 February 2017 and is addressed to all investment firms that are not systemic and ‘bank-like’. The European Banking Authority proposes that ongoing capital requirements shall be calculated based on capital factors so that firms that pose more risk to customers and markets should have higher capital requirements imposed on them.

The Central Bank has referred to the consultation as:

“…a significant opportunity for investment firms to influence policy development with respect to their prudential requirements and Irish investment firms are encouraged to respond to the consultation.”

The coordination of a strong industry view on these issues will be much more persuasive to regulators than the disparate submissions of individual firms and Matheson is happy to assist firms in presenting a united voice in addition to firm’s own submissions.