“Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II. We will therefore give people another year to prepare properly and make the necessary changes to their systems. Meanwhile, we are pressing ahead with the level II legislation to implement MiFID II and expect to announce those measures shortly.”

 Jonathan Hill
Jonathan HillBritish MP and former Commissioner responsible for Financial Stability, Financial Services and Capital Markets Union

“MiFID II will also ensure that legislation keeps pace with technological developments. The dramatic increase in the speed and volumes of order flows can pose systemic risks. The new rules ensure safe and orderly markets and financial stability through the introduction of trading controls, an appropriate liquidity provision obligation for high-frequency traders pursuing market-making strategies and by regulating the provision of direct electronic market access.”

Michel Barnier
Michel Barnier European Chief Negotiator for the United Kingdom Exiting the European Union

“The objective of PRIIPs is to increase protection of retail investors and restore consumer trust in the financial services industry. Furthermore, greater transparency and harmonisation will benefit the internal market in financial services by creating a level playing field among different products and distribution channels.”

Jyrki Katainen
Jyrki KatainenVice-President for Jobs, Growth, Investment and Competitiveness

“Banks and capital markets are rather closely interconnected as parts of the wider financial system: banks and markets complement each other in financing the real economy.”

Vítor Constâncio
Vítor ConstâncioVice-President of the ECB

Secondary financial markets are where previously issued financial instruments such as stocks, bonds, options, forwards and futures are bought and sold by banks and market participants. The secondary market includes both debt and equity markets.

Well-functioning secondary markets are a key element of the Commission’s priority of establishing a Capital Markets Union (CMU), which is intended to help build a true single market for capital across the 28 EU Member States.

The EBF supports robust and liquid secondary markets, with consistent regulation and supervision.

The EBF’s Secondary Markets Working Group is responsible for all topics related to the regulation of secondary financial markets, and is there to assist its members in coordinating views on relevant legislation and achieving the smooth functioning of secondary financial markets through best practice and regulation.

The Secondary Markets WG is chaired by Sara Mitelman Lindholm, General Counsel of the Swedish Securities Dealers Association.

Markets in Financial Instruments Directives

The Markets in Financial Instruments Directive 2004/39/EC (known as MiFID) provided harmonised regulation for investment services in the EU. It set out the conditions for initial authorisation and the on-going regulatory requirements that investment firms, Regulated Markets (RMs) and Multilateral Trading Facilities (MTFs) must meet in order to carry out their activity. It was designed to encourage competition between trading venues for financial instruments in Europe, and also aimed to ensure sufficient levels of investor protection for investors and consumers of investment services across the EU.

The Commission made a proposal in 2011 for revisions to MiFID, which set out four broad objectives for the revision of the original MiFID 1 Directive:

  • strengthening investor protection;
  • reducing the risks of a disorderly market;
  • reducing systemic risks; and
  • increasing the efficiency of financial markets and reduce unnecessary costs for participants.

The new rules revising the MiFID framework were adopted in June 2014. These consist of a directive (MiFID 2) and a regulation (MiFIR). They provide an updated legal framework for the requirements applicable to investment firms, regulated markets, data reporting services providers and third country firms providing investment services or activities in the EU. These rules became applicable as from 3 January 2018.

The EBF continues to work with its members to solve issues relating to the implementation of MiFID 2 and MiFIR. The EBF has also run a series of workshops over the past years with its members and with the participation of European Commission and ESMA officials to discuss ongoing issues with the implementation of MiFID 2/MiFIR.

Key information documents for packaged retail and insurance-based investment products (PRIIPs)

Packaged retail investment and insurance-based products (PRIIPs) are a broad category of financial assets that are commonly provided to investors in the EU as an alternative to savings accounts. These products are provided through banks or other financial institutions.

The PRIIPs Regulation aims to encourage efficient EU markets by helping investors to better understand the key features, risk, rewards and costs of different PRIIPs through access to a short and consumer-friendly document (a Key Information Document or KID), that also allows easy comparison between different products.

Following application of this Regulation, PRIIP manufacturers are required to prepare and publish a stand-alone, standardised Key Information Document (KID) for each PRIIP. Firms that advise retail investors on PRIIPs or sell PRIIPs to retail investors must provide the KID to the retail investor in good time before before those retail investors are bound by any contract or offer relating to that PRIIP.

The EU Regulation governing the information provided to investors in packaged retail and insurance-based financial products (Regulation (EU) No. 1286/2014) entered into application on 01 January 2018.

The EBF is working with its members to address shortcomings in this legislation that are causing uncertainty for financial market participants, and inconsistencies with implementation across the EU.

Engagement with other stakeholders

The Chair of the EBF’s Secondary Markets Working Group, Sara Mitelman Lindholm (Swedish Securities Dealers Association) also sits on the ESMA Securities and Markets Stakeholders Group, where she also provides the views and experiences of the European banking sector.

The Securities and Markets Stakeholders Group helps to facilitate consultation between ESMA, its Board of Supervisors and stakeholders on ESMA’s areas of responsibility and provides technical advice on its policy development. This helps to ensure that stakeholders can contribute to the formulation of policy from the beginning of the process.

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