In the field of financial services, 2018 began with the entry into force of the revised directive on the financial instruments market (MiFID II) on Wednesday 3 January. Considered the last area of reforms adopted following the financial crisis, it brings in a raft of measures aiming to increase the transparency of the financial markets and reinforce protection for investors (see EUROPE 11078).
Last month, the Commission issued several equivalency decisions recognising several regulated share trading platforms in the US, Australia, Hong Kong (see EUROPE 11925) and Switzerland (see EUROPE 11931) as equivalent to those of the new European framework, in order to ensure continuity of trading after 3 January.
Under the new rules, investors will receive more information on the products and services offered or sold to them, whilst market operators will be subject to stricter transparency obligations applicable both before and after the sale of financial instruments.
The new rules also provide for the creation of organised trading facilities (OTF), new categories of stock exchange platforms, which will carry out transactions concerning financial products other than shares (structured products, standardised derivatives, CO² emissions quotas). Controls will also be set in place for trading activities carried out electronically on a high-speed basis, such as high-frequency trading.
Another major first of the directive is that it will restrict speculation in raw materials by introducing a harmonised system at EU level. On the basis of guidelines of the European Securities and Markets Authority, states may now bring in limits on net positions (not on the entirety of the contracts) that an investor may hold on raw materials derivatives (wheat, soya, sugar), given their potential impact on price setting.
Readers may recall that the entry into application of the revised directive has been put back a year. The Commission explained this on the grounds of the complexity of the technical infrastructure to be set in place to allow its provisions to produce all of their effects (see EUROPE 11487).
On Wednesday, three clearing houses in Germany (Eurex Clearing, the clearing house of the Deutsche Börse) and the UK (ICE Futures Europe and the London Metal Exchange) secured extra time up to 3 July 2020 from their national regulators to open up their systems to any trader so requesting. The directive includes a free access clause that removes the requirement to clear a transaction within the same platform on which it was transacted.
The member states had until 3 July 2017 to transpose this directive into their national legislation. Even though the new rules entered into force on Wednesday, only 12 member states have fully transposed the directive (Austria, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Hungary, Ireland, Italy, Slovakia and the UK). The Commission has so far opened infringement proceedings against 19 member states. (Original version in French by Marion Fontana)