Markets In Financial Instruments Directive ("MiFID"): Implementing Measures Close To Adoption

The European Commission has welcomed the European Securities Committee's (ESC) (unanimous) approval of a series of technical measures implementing the Markets in Financial Instruments Directive (MiFID), which follows a strong endorsement from the European Parliament on 15 June 2006. The Commission is likely to give its final approval in September 2006. MiFID is one of the cornerstones of the Financial Services Action Plan (FSAP) and will play a vital role in creating a robust, common regulatory framework for Europe's securities markets. MiFID is already acting as a catalyst for significant market changes: exchanges, multilateral trading facilities (MTFs) and investment firms are positioning themselves in anticipation of the much more competitive conditions which it will create. The successful result in the ESC and the Parliament shows that the "Lamfalussy process", under which the measures are being adopted, is working very effectively. It shows a willingness on the part of all players - Member States, the European Parliament, regulators, markets and consumers - to work together constructively to achieve the right result for Europe's financial markets, European investors and the economy as a whole.

Internal Market Commissioner Charlie McCreevy said: "MiFID is a ground-breaking piece of legislation. It will transform the landscape for the trading of securities and introduce much needed competition and efficiency. It is good news for investors because it will both increase their level of protection and give them greater choice. It should drive down the cost of capital, generate growth and boost our competitiveness. Once the European Parliament has finalized its formal work, we must move quickly and robustly to ensure equivalent and effective implementation by November 2007. All firms in the business should now prepare.

MiFID will remove obstacles to firms' use of the EU-wide investment 'passport', foster competition and a level playing field between Europe's trading venues, and ensure a high level of protection for investors across Europe.

The implementing (or "level 2") measures develop a number of the provisions set out in the framework (or "level 1") Directive adopted in April 2004. Having emerged from a lengthy consultation and negotiation phase, they are balanced, proportionate and sensible. They will protect investors and consumers without imposing unnecessary compliance burdens on firms.

Now that the draft measures have been examined by the Parliament and voted on in the ESC, the Parliament has a one-month period to check that the limits set in the level 1 Directive have been respected, before the measures are finally adopted by the Commission, probably in September 2006. Member States will subsequently have until 31 January 2007 to implement the legislation, with firms being required to comply with the entire package of measures on 1 November 2007.

The initial drafts for the level 2 measures were prepared on the basis of advice provided by the Committee of European Securities Regulators.
More information on the MiFID implementing measures is available at:

http://ec.europa.eu/internal_market/securities/isd/mifid2_en.htm