European policy makers agreed wide ranging changes to regulation for operators and participants in European financial markets in late-running talks.
More than two years after the European Commission first proposed changes to the Markets in Financial Instruments Directive (MiFID) the European Parliament, Commission and the Council of the European Union have reached political agreement on the text for the revised MiFID and the new Regulation, MiFIR, collectively known as MiFID II.
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Negotiators were under pressure to reach agreement in time to finalise the text ahead of the European Parliamentary elections in May.
The European Securities and Markets Authority (ESMA) will consult on further detailed rules throughout 2014. Firms should begin to consider their implementation plans in anticipation of being fully compliant with MiFID II by the end of 2016.
Laura Cox, PwC financial services partner, said: "Although reaching agreement has taken a long time, this is only the start of the process for firms. Political agreement on the high level principles enables ESMA to begin consultation on the detailed MiFID II requirements.
"The European Parliament has confirmed that third country firms operating branches in the EU will be able to benefit from a MiFID passport if their home rules are considered equivalent to MiFID. This opens up new marketing possibilities for some EU branches. But it is not yet clear whether equivalence will be mandatory even for firms that do not wish to use a MiFID passport, or how firms from non-equivalent jurisdictions will be treated.
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By GlobalData"The EU is coming more in line with the UK on investor protection measures, including a ban on inducements paid to independent financial advisors and an obligation to design investment products to meet the needs of specified groups of clients.
"A lot of the focus in recent months has been on a handful of contentious issues, but MiFID II includes enhanced governance and general operational requirements that have a much wider impact. MiFID II will affect all regulated firms in Europe so firms need to begin assessing the full operational impact of these changes now."
