EU Sees Light at End of Tunnel on MiFID II Overhaul: Timeline

European Union policy makers say the end’s in sight for the overhaul of market rules known as MiFID II, a vast law that affects nearly every financial firm operating in the bloc, from giants like Deutsche Bank AG and Goldman Sachs Group Inc. to small hedge funds.

Putting it into practice hasn’t been a straightforward process. Here’s a list of the key dates still to come and a brief history to show how we got here.

The Road Ahead

The first task is to nail down a proposed one-year delay -- to Jan. 3, 2018 -- of the revised Markets in Financial Instruments Directive, or MiFID II. The European Parliament and the EU’s 28 member states reached an agreement in early May on a final version of the legislation that postpones the MiFID II application date.

The parliament plans to vote on the bill in June, according to Markus Ferber, the assembly’s lead lawmaker on the file. For the member states, national officials plan to sign off on the bill on May 18. After that, ministerial-level approval is needed, and could come when EU finance ministers convene in Luxembourg on June 17.

In the meantime, regulators have to publish a raft of technical standards -- the nuts and bolts needed to make the law work. The European Commission, the EU’s executive arm, plans by the end of May to issue the last of three so-called delegated acts under MiFID II. Thirty-one regulatory technical standards must be completed, including rules on hotly contested issues such as bond-market transparency. 

The commission plans to wrap up all this rule-making before the summer holidays begin in July. Assuming the delay measure passes, EU member states would then have until July 3, 2017, to convert the rules into national law. 

How We Got Here

June 2014: The Directive on Markets in Financial Instruments and its accompanying regulation enter the EU statute book, with an application date of Jan. 3, 2017.

September 2015: The European Securities and Markets Authority sends final technical standards under MiFID II to the European Commission, the EU’s executive arm, for endorsement.

November 2015: The commission raises the possibility of pushing back the start date of MiFID II by one year. It says a delay may be needed to give the industry time to adapt its businesses and systems.

Feb. 10, 2016: The commission formally proposes a delay that is “strictly limited” to allowing technical work to be finished.

March 14: The commission tells ESMA to rewrite some of the regulatory technical standards under MiFID II, saying a “more cautious approach” is needed on regulations on issues including increased transparency in non-equity markets. ESMA responds to the commission on March 21.

April 7: The European Parliament adopts a negotiating position on the proposal to delay MiFID II, tacking on “targeted amendments” including exemptions on certain securities-financing transactions.

April 7: The commission adopts the first delegated act under MiFID II, containing “provisions on investor protection, notably on safeguarding of clients’ funds and financial instruments, product governance and monetary/non-monetary compensation.”

April 25: The commission adopts the second delegated act.

April 28: EU member states agree on a negotiating position on the MiFID delay, also including amendments, paving the way for talks with the parliament on a final version of the legislation.

May 2: ESMA responds to the commission with amended technical standards.

May 2: The European Parliament and EU member states agree on a final text of the MiFID II postponing legislation.

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