Many of the wide ranging amendments address the perceived barriers MiFID II introduced in capital markets and are likely to be welcomed by industry.
The European Commission (the Commission) has adopted a legislative proposal for a directive amending Directive 2014/65/EU on markets in financial instruments (MiFID II) as part of a capital markets recovery package designed to facilitate the economic recovery following the COVID-19 pandemic. The proposed text amending MiFID II was published on 24 July 2020, along with proposals to amend securitisation rules, the Capital Requirements Regulation (575/2013) (CRR), and the Prospectus Regulation (2017/1129).
The Commission is proposing targeted amendments to MiFID II requirements in order to reduce some of the administrative burdens that experienced investors face in their business-to-business relationships. The amendments refer to a number of requirements that were identified during the Commission’s MiFID/MiFIR public consultation as being overly burdensome or hindering the development of European markets (see MiFID Refit — Commission Consults on Review of MiFID II Framework). The COVID-19 crisis makes alleviating unnecessary burdens and providing opportunities to growing markets even more important. The Commission is also proposing to amend the MiFID rules affecting energy derivatives markets.
At the same time, the Commission has opened a public consultation on amendments to the MiFID II Delegated Directive (EU) 2017/593 to increase the regime for research on small and mid-cap issuers and on fixed-income instruments to help the recovery from the COVID-19 pandemic. In particular, small and mid-cap issuers need a good level of investment research to give them enough visibility to attract new investors. Notably, the Commission is consulting on a “research unbundling” exception under this proposed new alleviated regime.
For a full briefing exploring the proposed amendments to MiFID II in more detail, please see Latham’s Client Alert.