MiFID II Review

MiFIR – AMAFI’s priorities

As part of ongoing European work on the MiFIR review, AMAFI Chairman Stéphane Giordano, accompanied by members of the European Action Committee, presented AMAFI's priorities to representatives of the German, Finnish and Italian Finance Ministries as well as the Danish supervisor.

AMAFI stressed the need to integrate pre-trade data within the framework of setting up a European consolidated tape for equities, in order to make the tape attractive to market participants and thus ensure its financial viability. AMAFI also underlined the need for the main components of the revenue-sharing scheme (beneficiaries, allocation keys) to be defined at Level 2 by ESMA and approved by the co-legislators, owing to the political nature of the issue.

On the proposed reforms to equity and non-equity transparency regimes, while reiterating the need to factor in the regulatory amendments being mooted by the UK, in order to prevent a potential transfer of liquidity from the EU to British markets, AMAFI advocated a progressive approach aimed initially at creating a consolidated tape for equities and another for bonds, before potentially considering broader reforms, which should in any case be based on specific impact studies.   

ESMA suitability guidelines

ESMA is proposing to amend its suitability guidelines, chiefly to reflect the inclusion in MiFID II of sustainability factors and sustainability risks and preferences in certain organisational requirements and operating conditions for investment firms.

AMAFI shared its observations (AMAFI / 22-29) on ESMA's proposals. It stressed the need to tailor the proposed provisions to ensure their feasibility, given the fiendish complexity of the new European regulatory framework for sustainability, the total lack of experience with the framework among professionals and investors, and the low maturity level of the products available on the market. AMAFI said that there was a danger that these provisions could discourage customers from investing in sustainable products and dissuade professionals from advising such investments.

It also highlighted the challenges caused by the fact that several pieces of European legislation on sustainable finance – some of which are not yet finalised – are coming into force at different times, making it harder for professionals to get to grips with the provisions and for firms to implement them. Accordingly, AMAFI suggested to ESMA that the guidelines should not become applicable until at least a year after their publication.

AMAFI also called for more flexibility in terms of the application of the new provisions to professional customers and to certain specific transactions carried out for hedging purposes.