Our Leeds briefing focused on the protecting investors elements within the longer, broader and more granular MiFID II

1. MiFID II Level 2
Investor protection matters
Bovill briefing 15th July 2015 – Leeds
Mark Spiers and Neil Walkling

2. MiFID I
“MIFID is a ground-breaking piece of
legislation. It will transform the landscape for
the trading of securities and introduce much
needed competition and efficiency.
…Last but not least, investors gain in terms
of greater choice and stronger protection.”
Commissioner Charlie McCreevy – 2007
MiFID II
"These new rules will improve the way capital
markets function to the benefit of the real
economy. They are a key step towards
establishing a safer, more open and more
responsible financial system."
Commissioner Michel Barnier – 2014
Outgrown MiFID I
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3. Making markets more robust
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MiFID II aims to:
 make financial markets more robust and
efficient
 take account of technological developments
since MiFID I
 increase transparency of both equity and
non-equity markets
 introduce a stricter framework for commodity
derivatives markets
 reinforce supervisory powers
 strengthen investor protection.

4. Understanding the levels of detail
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Level 1 – Framework Legislation
• Delegated and Implementing Acts
Level 2 – Implementing Measures
• Implementing Technical Standards and Regulatory Technical Standards
Level 2.5 – Technical Standards
• ESMA issue non-binding guidance on the meaning of the Levels 1 and 2
• National regulators comply or explain
Level 3 – Regulatory convergence
• Enforcement action by EC for failure to implement or inconsistent implementation
Level 4 – Enforcement of Directive
Recast
MiFID
MiFIR
MiFID
II

5. MiFID II timeline
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2014 2015 2016
Legislation
Level One entry
into force
2.7.14
National
Transposition
Due 3/7/16
MiFID II
applies
3/1/17
ESMA Level Two
Advice to EC
19/12/14
RTS to EC
Due 03/07/15
ITS to EC
Due 3.1.16
FCA Discussion
Paper
26.3.15
FCA Consultation
Paper
Due 12.15
Level Two
published in OJ
due 3.1.16
you
are
here

6. What is in MiFID II?
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MiFID (Directive)
Scope – Exemptions and Definitions
Authorisation
Corporate Governance
Conflicts of Interest
Inducements and Commissions
Client Categorisation
Product Governance
Best Execution
Algorithmic Trading
Passporting
Third Country Firms – Branch
MiFIR (Regulation)
Third Country Firms – Cross Border
Pre and Post Trade Transparency
Trading Obligations
Consolidated Tape
Transaction Reporting
Product Intervention

7. Telephone
recording
Information
to clients
Reporting
Client
Agreements
AppropriatenessSuitability
Fair, Clear and
not MisleadingRemuneration
ConflictsProduct
Governance
Record
Keeping
Complaints
Advice
Client
Assets
The investor protection hopper
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Compliance
Inducements
Strengthened investor protection
Underwriting
and Placing
ECPs Best
Execution
Client Order
Handling
Product
Intervention

8. Key themes – investor protection
Retail standards
being applied to
professional clients
Board sign off
Senior management
oversight
Role of compliance
Disclosure
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9. Direct
• Transaction Reporting
• Commodity Derivatives
• High Frequency and Algo Trading
Indirect
• On exchange derivatives trading
• Pre and post-trade transparency
Market matters for buy-side firms
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10. “The devil is in the detail”
• Senior management responsibility
• Proper project governance
• Gaps must be owned by the business
not compliance
• Robust tracking of compliance
• Expect questions from clients and
regulators
Learning from MiFID I
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11. Management and business buy-in
• MiFID II is something you have to do yourself, not
something that can be done to you by consultants.
• You and the whole business must be prepared to
embrace the change.
• Senior Management must support achieving
compliance.
Clear objectives and deliverables
• Each action needs to be clearly articulated.
• Clear understanding of what is compliance.
• Ownership
• Excellent reporting
Critical success factors
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12. • What rules apply to my business?
• Have they changed from MIFID I?
• If so, do I need to take action?
• If I do need to take action, what
exactly do I need to do, and
what is the effort needed?
• Who do I need to engage
with, when and how?
Approaching your project line by line
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13. There is a lot of content in MiFID II
Don’t wait for FCA rules or even the final EU legislation
START PLANNING FOR MiFID II NOW!
Have you started yet?
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• read
• ascertain gaps
• develop
solutions
• identify
opportunities
Analysis
and
planning
• change
• test
• train
• client contact
Implement
Yourproject

14. Questions?
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