November 19, 2018

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European Commission Adopts Delegated Act in Relation to MiFID II

On April 7, the European Commission adopted its first delegated directive (Delegated Directive) to supplement the amended and restated Markets in Financial Instruments Directive (MiFID II). The Delegated Directive sets out provisions in relation to the safeguarding of financial instruments and funds belonging to clients, product governance obligations, and the provision and reception of fees, commission, and monetary or non-monetary benefits (or inducements).

Notably, the Delegated Directive confirms that research provided to investment firms by third parties will not be considered an inducement if it is paid directly by the investment firm out of its own resources or from a separate research payment account (RPA), the operation of which is subject to certain conditions, including that investment firms agree to the research charge with clients, set a research budget that is regularly assessed and make a payment summary of the RPA available to clients or competent authorities on request. The Delegated Directive also confirms that investment firms providing execution services must identify separate charges for those services that reflect the cost of executing transactions only.

The European Council and European Parliament will consider the Delegated Directive and, once formally approved, the Delegated Directive will go into effect 20 days following its publication in the Official Journal of the European Union.

A copy of the Delegated Directive can be found here.

©2018 Katten Muchin Rosenman LLP

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About this Author

Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring and documentation relating to OTC derivatives and structured products.

Prior to joining Katten, Nathaniel was a member of the US Regulatory and the Derivatives and Structured Finance practices at Allen & Overy LLP.

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