November 12, 2018

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European Commission Adopts MiFID II Delegated Regulations

On May 24, the European Commission (EC) adopted two delegated acts to supplement the amended and restated Markets in Financial Instruments Directive (MiFID II). The delegated acts both take the form of a regulation (together, Delegated Regulations) and cover: (1) the admission of financial instruments to trading on regulated markets (Admission Delegated Regulation), and (2) the suspension and removal of financial instruments from trading on regulated markets (Suspension Delegated Regulation).

Under MiFID II, regulated markets are required to have clear and transparent admission rules, to ensure instruments are traded in a “fair, orderly and efficient manner.” MiFID II further requires that those rules also ensure transferable securities are freely negotiable. The recently adopted Admission Delegated Regulation sets out specific criteria to determine if transferable securities are freely negotiable and also, criteria to assess whether transferable securities, units and shares in collective investment undertakings, and derivatives, are being traded in a fair, orderly and efficient manner. For example, in relation to derivatives, fair, orderly and efficient criteria include that the terms of the contract establishing the financial instrument are “clear and unambiguous” and “sufficient information of a kind needed to value the derivative is publically available,” among others.

MiFID II also contains requirements for operators of regulated markets to suspend or remove financial instruments, and any related or referenced derivatives, that no longer comply with the rules of the regulated market. The Suspension Delegated Regulation supplements this requirement, and further specifies that only derivatives that relate or reference to one financial instrument shall be caught. The Suspension Delegated Regulation does not apply to derivatives which have multiple price inputs, such as indexes or baskets of financial instruments.

As mentioned in previous updates, the European Council and European Parliament will consider the Delegated Regulations, and once formally approved, the Delegated Regulations will go into effect 20 days following its publication in the Official Journal of the European Union.

For more information, see  European Commission Adopts MiFIR Delegated ActEuropean Commission Adopts Second MiFID II Delegated Act and European Commission Adopts Delegated Act in Relation to MiFID II​

The Admission Delegated Regulation is available here and the Suspension Delegated Regulation, here.

©2018 Katten Muchin Rosenman LLP

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About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
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.

+44 0 20 7776 7629