CNMV - MiFID II

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MiFID II - MiFIR

On January 3rd 2018, the implementation of the new regulatory framework on financial markets and instruments, based on MiFID II Directive and MiFIR Regulation, has began.

What is it?

MiFID II. Is the 2014/65/EU Directive on financial instrument markets.

Based on the improvement of the rules already adopted by MiFID, it regulates the conditions for authorization and operation of the Investment Services Firms (ESI), including the freedom of establishment and provision of services in the EU, as well as the activity of companies from third states; the conditions for authorization and operation of regulated markets; the limitation of the positions and controls of the management of positions in derivatives on raw materials; the rules of conduct and investor protection to be followed by Investment Services Firms; data provision services and the designation and powers of the competent authorities introduce organizational and conduct requirementes for market participants with the aim of improving investor protection. Based on the improvement of the rules already adopted by MiFID, it regulates the conditions for authorization and operation of the Investment Services Firms (ESI=, including the freedom of establishment and provision of services in the EU, as well as the activity of companies from third states; the conditions for authorization and operation of regulated markets; the limitation of the positions and controls of the mangement of positions in derivatives on raw materials; the rules of conduct and investor protection to be followed by Investment Services Firms; data provision services and the designation and powers of the competent authorities introduce organizational and conduct requirements for market participants with the aim of improving investor protection.

Strives for the organized negotiation to take place on regulated platforms.
Introduces rules on algorithmic and high-frequency negotiation.
Improves transparency and supervision of financial markets, including derivatives markets, and addresses the shortcomings of the commodity derivatives markets.
Reinforces investor protection and rules of conduct as well as the conditions of competition in the negotiation and settlement of financial instruments.

The new rules, based on improved rules already adopted by MiFID, introduce organizational and behavioral requirements for market participants in order to improve investor protection.

MiFIR. It is EU Regulation No. 600/2014 on markets in financial instruments. It regulates pre- and post-trade transparency in relation to competent authorities and investors, the requirements and obligations of data service providers, establishes the obligation to negotiate derivatives in trading centres and certain supervisory action.

It establishes requirements on:

Dissemination of trading activity to the public.
Reporting operation data to regulators and supervisors.
Obligatory negotiation of derivatives in organized systems.
Elimination of obstacles between trading systems and settlement service providers to ensure greater competition.
Specific supervisory actions on financial instruments and positions in derivatives.

The objectives of this reform are:

Reinforce investor protection, regulating inter alia, advice on the commercialization of financial products and their incentives.
Adapt to technological and market developments,regulation practices such as automated algorithmic trading.
Promote the trading of financial instruments from OTC (over the counter) markets to trading centres (regulated markets, multilateral trading systems or organized trading systems).
Increase transparency in markets, not only in relation to the negotiation of shares and similar instruments, but also in relation to bonds or derivatives, to ensure their proper functioning in the setting of prices.
Improve the regulation of some financial products such as derivatives, especially derivatives on raw materials.
Facilitate the access of SMEs to financing, through the creation of "Expansive SME Markets".
Strengthen and harmonize supervision and sanctions available to competent authorities andavoid regulatory arbitrage.

In addition, MiFID II and MiFIR are developed by more than 30 non-legislative acts, both delegatd and implemented, approved by the Commission.

Basic regulation

European Commission:
Española:
- Royal Decree 1464/2018, of 21 December , implementing the consolidated text of the Securities Market Act, approved by Royal Legislative Decree 4/2015, of 23 October, and Royal Decree-Law 21/2017, of 29 December, on urgent measures for the adaptation of Spanish law to European Union regulations on the securities market, and partially amending Royal Decree 217/2008, of 15 February, on the legal regime for investment firms and other entities providing investment services, as well as partially amending the Regulation of Law 35/2003, of 4 November, on Collective Investment Schemes, approved by Royal Decree 1309/2005, of 4 November, and other royal decrees on the securities market.
- Royal Decree-Law 14/2018, of 28 September, amending the consolidated text of the Securities Market Act, approved by Royal Legislative Decree 4/2015, of 23 October
- Royal Decree-Law on urgent measures for the adaptation of Spanish law to EU regulations regarding the securities market
- Document to be consulted, the Ministry of Economy, Treasury Directorate-General: Proposed Draft Law for the transposition of Directive 2014/65 / EU of the European Parliament and of the Council of 15 May 2014 on financial instruments markets.