Trading transparency regulation Mifid ii facing further setbacks after EU Commission calls for revisions


The European Union has been fretting over the wording and the implementation of the trading standards reform for some time (Source: Getty)

There’s been another setback for the controversial securities market reform regulation known as Mifid ii.

Following a year long delay announced in February, the European Commission has now asked the EU's European Securities and Markets Authority (ESMA) to take another look at rules intended to flesh out reforms.

Banks and asset managers have called for the latest regulations, formally called the Markets in Financial Instruments Directive, to be finalised as soon as possible to give them time to prepare for the new deadline of January 2018.

The latest call for revisions is likely to spark concerns the new deadline will not be met, though some think the EU will stick to its plans.

“The clock is ticking on implementation and today’s announcement will inevitably delay the finalisation of the standards. However, the European Commission is unlikely to favour postponing the directive further, so 3 January 2018 will still be the likely implementation date,” said Michael McKee, head of financial services regulation at law firm DLA Piper.

Read more:  Markets in Financial Instruments Directive (MiFID II) date confirmed – but why are financial institutions doing more and achieving less?

In a letter to the ESMA the commission asks that three rules governing trading on commodities, so-called ancillary activity exemptions, and displaying prices in fixed income markets are reconsidered.

The rejected rules on ancillary activity exemptions would bring far more commodities trading under the regulatory net.

"I can confirm that we have received a letter from the Commission. We are studying the contents and are deciding on the way forward," an ESMA spokeswoman said.

The decision by the commission came after parliamentarians said the existing proposals were unsatisfactory.

“I am glad to see that the European Commission takes the concerns of the European Parliament seriously. The latest drafts were far from being acceptable for the European parliament,” said European Parliament MEP and rapporteur for Mifid ii Markus Ferber.

Concerns have also been raised as to how the measures would be put into practice. 

"There are serious question marks over how price transparency requirements would work – and how useful such disclosure would be – in illiquid markets," said Farid Anvari, from Baker & McKenzie's structured capital markets team.