After months of discussions in the Council of the European Union, the Irish Presidency of the Council of the European Union has reached a General Approach among EU Member States on the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). These two dossiers would refine current regulations relating to market structure and OTC derivatives, notably, high frequency/algorithmic trading, pre-trade transparency, supervisory powers of regulators, and provide clear operating rules for all trading activities.
Irish Finance Minister Michael Noonan TD said that, “Reaching agreement among Member States on these new rules has been an Irish Presidency programme objective.” Finance Minister Noonan continued, “We have worked extensively with Member States over the past six months in getting this agreement today, which paves the way for negotiations to begin with European Parliament on finalising the legislation.”
According to the Irish Presidency statement, the main elements of today’s compromise include:
- Enhanced transparency: Member States have decided to limit “dark pool” trading and introduce a new trade transparency regime for non-equities markets
- More robust and efficient market structures with the introduction of a new type of trading venue, the Organised Trading Facility (OTF)
- Specific support to facilitate better access to capital markets for small- and- medium sized enterprises.
- Non-discriminatory open access to trading venues and central counterparties
- New safeguards to take account of technological developments such as algorithmic trading or high speed trading
- Stronger investor protection
- New rules on corporate governance and managers’ responsibility
- Enhanced framework for derivatives markets
MiFID/MiFIR will be presented, likely as an “A” item (i.e., a vote with no discussion), by Minister Noonan to other EU Finance Ministers for approval at their ECOFIN meeting on Friday, June 21.