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White & Case Derivatives Insight – The Delta Report

MiFID II/MiFIR Update – January 2017

This update provides a snapshot of events in 2016 which has led to the current status of MiFID II and MiFIR.


MiFID II/MiFIR Delayed

17 June 2016: Council adopted legislation extending the deadline for the application of MiFID II to 3 January 2018 and extending the deadline for transposition into national laws by 3 July 2017 "to take account of the exceptional technical implementation challenges faced by regulators and market participants".


Reporting Obligation (Article 26 of MiFIR / RTS 22)

28 July 2016: Commission adopted Delegated Regulation.

15 September 2016: Parliament extended the objection period to 22 November 2016 (rather than 22 October 2016 as proposed by Commission) prior to publication in the Official Journal as it was of the view that the Commission has made more than typographical changes to the ESMA draft RTS.

10 October 2016: ESMA Guidelines on Transaction reporting, order record-keeping and clock synchronisation under MiFID II published.

26 October 2016: ESMA Technical Reporting Instructions, MiFIR Transaction Reporting, published.


Commodity Position Limits (Article 57 of MiFID II/RTS 21)

28 September 2015: ESMA submitted draft RTS on the methodology for the calculation and the application of position limits for commodity derivatives traded on trading venues and economically equivalent OTC contracts as draft RTS 21 to the Commission pursuant to Article 10(1) of Regulation No (EU) 1095/2010 and Article 57(3) and (12) MiFID II.

17 March 2016: Markus Ferber MEP (Parliament's Rapporteur for MiFID II), stated the Commission has sent back draft RTS to ESMA to revise them. Concern that RTS need to take into account Parliament's position more thoroughly:

"Especially the position limits regime urgently needs a comprehensive redrafting in order to effectively curb food speculation."

20 April 2016: Commission notified ESMA of its intention to endorse draft RTS 21 subject to a number of changes.

2 May 2016: ESMA published Opinion (ESMA/2016/668) proposing amendments to its draft RTS 21.

1 December 2016: Commission published RTS 21 which is subject to a scrutiny period of three months by the European Parliament and the Council of the European Union.

19 December 2016: ESMA Q&A re. MiFID II and MiFIR commodity derivatives topics published.


Trading Obligation (Articles 28 & 32 of MiFIR/RTS 5)

20 September 2016: ESMA published discussion paper seeking stakeholder's feedback on the options put forward by ESMA on how to calibrate the trading obligation. MiFIR foresees two tests to determine the trading obligation:

  • The venue test: a class of derivatives must be admitted to trading or traded on at least one admissible trading venue; and
  • The liquidity test: whether a derivative is 'sufficiently liquid' and there is sufficient third-party buying and selling interest.

The discussion paper includes options on how to determine the trading obligation by applying both tests, including an initial liquidity assessment on the basis of trading data for the six month to end-2015.

The consultation closed on 21 November 2016.

13 June 2016: Commission adopted further Delegated Regulations under MiFID II/MiFIR on direct, substantial and foreseeable effects of derivative contracts within the EU and the prevention of the evasion of rules and obligations ("RTS 5").

Publication of RTS 5 in Official Journal is on hold until Corrigendum is finalised.


UK Implementation

29 July 2016: FCA published second set of implementation proposals for MiFID II (CP16/19). This CP followed on from CP15/43, published in December 2015. In particular, the FCA proposed a new section of the Market Conduct Sourcebook to set out guidance and directions on the MiFID II regime for position limits, position management and position reporting for commodity derivatives contracts. The consultation closed on 28 October 2016. A policy statement is expected to follow in Spring 2017.

29 September 2016: The FCA has published its third consultation paper (CP16/29) on the implementation of MiFID II. In particular, MiFID II rules relating to structured deposits will be put into COBS (relating to e.g. inducement rules and independence standard for personal recommendations to retail clients in the UK). The consultation closed on 31 October 2016 for chapter 16 and 4 January 2017 for all other chapters.

Q2 2017: Policy statement expected.


Derivatives Newsletter
January 2017

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