The European Union’s Markets in Financial Instruments Directive II (MiFID II), a series of regulatory changes that became effective in 2018, will have a significant impact on the securities and investment management industry in the EU and around the world. Morgan Lewis’s global team has the knowledge and skill to navigate clients through the challenges presented by the transition to this regime.
Our lawyers are working with dozens of major securities and investment management clients on the transition to the MiFID regime, including technical and cross-border issues and related dialogues with regulators, including the UK Financial Conduct Authority and the US Securities and Exchange Commission.
The staff of the US Securities and Exchange Commission division of Investment Management announced that it would allow its October 26, 2017 no-action letter to SIFMA to expire on July 3, 2023—raising questions about the possible investment adviser status of broker-dealers that, after that date, accept cash or “hard dollar” payments for research from investment managers subject to the EU Markets in Financial Instruments Directive II.
The European Commission (the Commission) has made sustainable finance an express initiative within its overall plans to strengthen capital markets in the European Union. In July 2018, the Commission sought advice from the European Securities and Markets Authority (ESMA) on potential legislation under EU directives governing fund managers and investment firms with regard to sustainability. ESMA published its advice on 30 April 2019.
The proposals pave the way for the integration of environmental, social, and governance considerations into the day-to-day thinking of financial services firms.
But do landmines remain?
Brexit notwithstanding, the United Kingdom implemented MiFID II locally, on time; however, FCA deferred the opportunity to assist industry by clarifying the implications of the new research payment regime for global asset managers.
The European Securities and Markets Authority foresees regulatory and arbitrage risks in Brexit and has issued an opinion as a practical tool to help achieve supervisory convergence among EU regulators—Brexit negotiations begin on June 19, and Brexit is scheduled to occur on or before March 30, 2019 unless an extension is agreed.
The MiFID II regime will have significant ramifications for US investment managers and their use of client commissions to obtain research—especially as cross-border impacts have yet to be addressed by global regulators.
The MiFID II regime will have significant ramifications for US investment managers and their use of client commissions to obtain research—especially as cross-border impacts have yet to be addressed by global regulators.
The MiFID II regime will have ramifications for buy-side global asset managers and sell-side research providers relating to use of dealing commissions and cost allocation for research expenditures.
While the swirl of day-by-day posturing, partisan commentary, and reluctance of the UK and EU authorities to reveal their negotiating hands make it challenging to discern probable routes forward and plan accordingly, there is no reason why even a "hard Brexit" cannot encompass access to the single market for financial services companies.
The FCA has found that client hospitality events do not always enhance the quality of service to clients in line with its inducement rules.
Should Britain decide to leave both the EU and EEA as a result of a “Brexit” vote on 23 June 2016, the impact on UK and EU financial services firms could be significant.
On 12 June 2014 the final texts of MiFID II and MiFIR1 were published in the Official Journal of the European Union, comprising the package of reforms and amendments to the Markets in Financial Instruments Directive2 which establishes the framework for the regulation of financial markets and securities across the European Union.
After two years of discussion and negotiation, it was announced on 14 January 2014 that the European Commission, European Parliament and the Council of the European Union have reached informal political agreement on “MiFID II”, the package of reforms and amendments to the Markets in Financial Instruments Directive which establishes the framework for the regulation of financial markets and securities across the European Union.
Steve Stone of Morgan Lewis will present on the topic of “The framework for unbundling and implications for cross-border research”.
Forthcoming changes to regulation governing the provision and receipt of research are among the most influential aspects of MiFID II in shaping the financial markets landscape.
EUROPA Technical Standards under MiFID I, MiFID II and MiFIR
ESMA Q&As
ESMA Q&A on MiFIR Data Reporting
Official Journal of the European Union
FCA Policy Statement II – July 2017
FCA Policy Statement I – March 2017
FCA Consultation Paper VI - July 2017
FCA Consultation Paper V - March 2017
FCA Consultation Paper IV- December 2016
FCA Consultation Paper III- September 2016
FCA Consultation Paper II - July 2016
FCA Consultation Paper I - December 2015
Financial Services and Markets Act 2000 (Regulated Activities)(Amendments) Order 2017
Response to Consultation Paper
Annex A to Response to Consultation Paper
Annex B to Response to Consultation Paper
Annex C to Response to Consultation Paper
French AMF's MIFID II Guide for Asset Management Companies
This guide aims to help asset management companies implement the new measures introduced by MiFID II. It will be updated to take account of the additional texts of the directive. The AMF has covered all the key topics of the directive for asset management companies, including product governance, “independent” investment advice, fees or best execution.
EU Update: The Latest Developments on Brexit, MAR, and MiFID II, The Investment Lawyer
Our goal with this article is to provide asset managers with the current state of Brexit so that they can continue to assess its potential impact on their businesses.