The European Commission has put forward proposals to revise the Markets in Financial Instruments Directive (MiFID). The proposals consist of a directive and a regulation. The key elements are:
- Organised Trading Facilities (OFTs) will be brought within the regulatory framework of the MiFID
- New safeguards are introduced for algorithmic and high frequency trading ("flash trading").
- The transparency of trading activities in equity markets will be improved; exemptions would only be allowed in certain circumstances. The new rules also introduce a transparency regime for trade in non-equities markets.
- Supervisors will be able to ban specific products, services or practices if they jeopardise investor protection, financial stability or the orderly functioning of the markets. There will be stronger supervision of commodity derivatives markets.
- Stricter requirements will be set for portfolio management, investment advice and the offer of complex financial products. Independent advisers and portfolio managers will be prohibited from making or receiving third-party payments or other monetary gains. Rules on corporate governance and managers' responsibility are introduced for all investment firms.
- The revised MiFID will also apply to the trade in emission allowances.
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