Directive On Markets In financial Instruments (“MiFID”): Commission Extends Transposition Deadline And Continues Consultation On Implementing Measures

The European Commission has proposed a new Directive extending by six months (until 30 October 2006) the deadline by which Member States must write into national law Directive 2004/39/EC on markets in financial instruments (“MiFID”), previously known as the Investment Services Directive. The proposal also gives firms and markets another six months (until 30 April 2007) to adapt their structures and procedures to the new requirements. Meanwhile, the Commission is inviting comments on its third working document on implementing legislation for MiFID. While the first working document focused on transaction reporting plus exchange of information between competent authorities and the second on organisational requirements for investment firms, this document deals mainly with issues of market transparency. The document is available at: http://europa.eu.int/comm/internal_market/securities/isd/index_en.htm

Internal Market and Services Commissioner Charlie McCreevy said: “We’re always prepared to listen to the concerns of Member States and industry. This extension has been made to provide the finance industry with enough time to adequately address the operational and systems issues that arise from the need to implement MIFID Of course, we want to keep delays to a minimum and I urge Member States to adapt their laws, and the industry its practice, ahead of the new deadlines. Meanwhile the consultations on implementing measures will continue.”

Extension of MiFID implementation deadlines

The Commission decided to propose these deadline extensions following requests from Member States and industry. The proposal also addresses the timing for both the repeal of the current Investment Services Directive (which is replaced by MiFID) and a number of reports on the application of MiFID.

The proposal has now been submitted to the Council and European Parliament. The Commission recommends that any discussions cover only the proposed technical modifications to MiFID; there is no intention to re-open political debates.

Consultation on third working document on MiFID

The working document has been drawn up following technical advice from the Committee of European Securities Regulators (CESR). Its publication is part of the open and transparent process for drawing up technical implementing measures (see IP/02/195).

This document does not constitute a formal Commission proposal; nevertheless, informal discussions have already started in the European Securities Committee.

The document covers some of the proposed implementing measures, in particular: client order handling rules; pre- and post-trade transparency rules for financial institutions executing securities trades internally and equivalent rules for regulated markets and Multilateral Trading Facilities (MTFs); requirements for regulated markets to have clear and transparent rules regarding the admission of financial instruments to trading.

Comments should be sent to the following e-mail address by 16 August 2005: Markt-G3@cec.eu.int

The consultation on the second MiFID working document, covering organisational requirements for investment firms and conflicts of interest, remains open until 17 July 2005.

Comments will be posted on the above-mentioned website, unless authors specifically request the contrary. The Commission will draw up its formal proposal at a later stage.