Proposed New Rules On FX Contracts Under MiFID II

Whether or not FX spot contracts relating to currencies are financial instruments for the purposes of the Markets in Financial Instruments Directive ("MiFID") has been the subject of much discussion. The European Commission is now considering adopting a delegated regulation ("Draft MiFID II FX Regulation"), as a MiFID II¹ Level 2 measure, which will clarify this issue under MiFID II. If adopted, the Draft MiFID II FX Regulation will also have implications for other legislation which relies on the MiFID definition of financial instrument. This includes the European Market Infrastructure Regulation (Regulation 648/2012) ("EMIR"), the fourth Capital Requirements Directive (Directive 2013/36) and the Market Abuse Directive (Directive 2014/57).