What Are Mifid Ii Requirements

ec.europa.eu/info/law/markets-financial-instruments-mifid-ii-directive-2014-65-eu_en Investor protection will be strengthened by introducing new product governance and independent investment advice requirements, extending existing rules to structured deposits and improving requirements in several areas, including board liability, incentives, information and reporting to clients, cross-selling, employee compensation and fulfillment. Access to the Websites is by invitation only for institutional investors. No information or material contained on the Sites is or should be construed as an offer to complete any transaction or investment. The information on these websites is provided by the Hong Kong branch of Bank of America, N.A. and are compiled from information prepared by subsidiaries and affiliates of Bank of America Corporation. Your consent to the use of this website is granted by the Hong Kong branch of Bank of America, N.A. The first Markets in Financial Instruments Directive («MiFID I») entered into force on 1 November 2007. It introduced a number of points, including the MiFID passport, client categorisation requirements, client order processing requirements, pre- and post-trade transparency requirements, and requirements for investment firms to ensure that clients receive the best possible execution. MiFID II harmonises the application of supervision between Member States and extends the scope of the rules. In particular, more reporting and testing requirements are imposed to increase transparency and reduce the use of dark pools (private financial exchanges that allow investors to reveal their identity) and OTC transactions. Under the new rules, the trading volume of a stock in a dark pool is capped at 8% over 12 months. The new rules also target high-frequency trading. The algorithms used for automated trading must be recorded, tested and equipped with circuit breakers.

MiFID II is under scrutiny, which may lead to changes in many of these areas. Legislative proposals are expected in 2021. In the short term, there have been proposals for some «quick fixes» to the MiFID II investor protection rules and requirements for commodity derivatives, which are expected to be finalised in the course of 2020. In the attached annex, Nordea has included information on how MiFID II affects our cooperation and what you need to do as a Nordea Markets client to be ready for MiFID II. You should carefully review this information and provide Nordea with the necessary documentation. Under MiFID, all records of a transaction or transaction, including phone calls, emails, SMS and social media, must be kept. These registration requirements even extend to internal and external communication. MiFID II extends the scope of MiFID requirements to other financial instruments. Stocks, commodities, debt, futures and options, exchange-traded funds and currencies all fall under its jurisdiction. If a product is available in an EU country, it falls under MiFID II, even if, for example, the merchant who wants to buy it is based outside the EU.

In June 2017, the European Securities and Markets Authority («ESMA») published guidance on the governance requirements of MiFID II products. The guidelines outline a number of criteria for manufacturers to analyze when assessing a target market. These include MiFID II and MiFIR which ensure fairer, safer and more efficient markets and allow for greater transparency for all stakeholders. The new reporting and testing requirements will increase the amount of information available and reduce the use of dark pools and OTC trading. The rules on high-frequency trading will impose strict organisational requirements on investment firms and trading venues, and the provisions on non-discriminatory access to CCPs, trading venues and benchmarks will enhance competition. MiFID II means that organised trading in financial instruments must be transferred to multilateral and regulated trading venues or subject to transparency requirements when traded over-the-counter. Strict transparency rules ensure that clandestine trading in shares and other equity instruments that undermine price efficiency and fairness is no longer allowed. Transaction reporting was introduced under MiFID I and concerns the reporting of transaction details submitted by investment firms to regulators. It allows regulators to monitor market abuse in financial markets.

Under MiFID II, transaction reporting requirements have increased significantly. The scope of the products to be reported has been extended to require transaction reporting for all products traded on European RMs, OTFs and MTFs. In addition to the increase in the number of products to be reported, the number of data fields required for reporting MiFID transactions has also increased significantly. The new data fields include: MiFID II and MiFIR together form the legal regulatory framework for financial markets in the EU. They set out the regulatory requirements for investment firms, trading venues, data reporting services providers and third-country firms (`third-country firms`) providing investment services in the EU.