Negotiators from the European Parliament and the German Presidency of the EU Council reached a political agreement on Wednesday 9 December on adjustments to the Markets in Financial Instruments Directive (MiFID II) regarding disclosure requirements, product governance, and position limits, proposed by the Commission in July to support the post-Covid-19 economic recovery (see EUROPE 12535/11).
After a first ‘trilogue’ on 3 December, only one more negotiating meeting was needed to seal the agreement. The positions adopted by Parliament (see EUROPE 12609/9) and the Council of the EU (see EUROPE 12586/30) were indeed very close to the initial Commission proposal.
The agreement therefore broadly maintains the Commission’s proposals to reduce some administrative burdens on experienced investors under the ‘MiFID II’ Directive.
“The targeted adjustments to the ‘MiFID II’ Directive will make it easier for companies to access financial markets. We will get rid of red tape for investment firms, while maintaining a high degree of investor protection”, welcomed Parliament rapporteur Markus Ferber (EPP, Germany) in a statement.
According to our sources, Parliament and the EU Council have agreed to exempt certain product governance requirements: - corporate bonds with “make-whole” clauses, which protect investors against losses when an issuer opts for early redemption by guaranteeing them a payment equal to the net present value of the coupons; - financial instruments distributed or traded to eligible counterparties.
The Commission’s proposal, which advocated relaxing the position limit regime for these derivative contracts in order to revive euro-denominated emerging energy markets, was debated by Parliament (see EUROPE 12608/9) but was eventually retained in the final text.
In addition, a new definition has been added to clarify that products derived from agricultural commodities include fisheries as well as animal feed products. For these products, the current regime will continue to apply, while less sensitive contracts will benefit from a more flexible regime.
The agreement must now be validated within the two European institutions.
Other agreements in sight
Further agreements may be reached in the coming days on additional capital market stimulus measures (see EUROPE 12613/30).
On Wednesday evening, Parliament and EU Council negotiators met for a third ‘trilogue’ on adjustments to the EU framework to facilitate the use of securitisation,while a second ‘trilogue’ is scheduled for Thursday on theCommission’s proposal to set up an abbreviated “EU Recovery Prospectus”. (Original version in French by Marion Fontana)