New MiFID II rules seek to apply lessons from financial crisis and aim to force banks to report details of trillions of euros in transactions

This article is more than 2 years old

This article is more than 2 years old

Bankers will work through the night to iron out last-minute hitches before Wednesday’s launch of a major change to European Union financial markets that aims to apply lessons from the financial crisis nearly a decade ago.



The new rules are already a year late due to their complexity, with regulators having to issue 11th-hour guidance to banks and financial firms to avoid freezing up trades as well as calming nerves of those not yet fully compliant.

The new regime shines a spotlight on the innards of stock, bond, commodity and derivatives markets by forcing banks, asset managers and traders to report detailed information on trillions of euros in transactions.

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Banks and trading firms have spent millions of euros getting ready for the big day. A report from Expand, part of the Boston Consulting Group and IHS Markit, has estimated that top global banks and asset managers will have spent £1.5bn ($2.1bn) this year to comply with the rules.

Royal Bank of Scotland’s NatWest Markets has conducted a “soft launch”. From 2 January to 4 January, some of its staff will work through the night.

“Day one will hopefully go smoothly and we are as ready as we can be,” Giovanni Mazzocchi, head of macro distribution in Europe for Barclays, said. “There are a few overnighters going on to make sure everything will work on the day.”

Credit rating agency Standard & Poor’s said there would likely be more losers than winners from the changes.



The aim is to boost transparency and strengthen investor protection to avoid some of the problems of the 2007-2009 financial crisis.

Stock, bond, derivatives, commodity and other trades must all be reported to a repository, giving regulators a trove of data to track trades and try to spot bubbles early after failing to see the last crisis coming.

When the rules go live on Wednesday, fund managers and others must for the first time fill in a transaction report with up to 65 bits of data within 15 minutes of a trade – or risk being fined.

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The rules, known as MiFID II or Markets in Financial Instruments Directive II, revamp the 2007 MiFID law and broaden its scope to take in more financial products.

The European securities and markets authority (ESMA), which is overseeing the rollout, published a flurry of statements just before Christmas to tackle some remaining problems.



So far, only 11 of the EU’s 28 member states have written MiFID II fully into national law. But ESMA has said all firms can carry on even if their home state has not completed the legislative process.

Germany, France and Britain, home to the EU’s top financial centres, are among those nations whose laws are up to speed, with big banks likely to be ready.

MiFID II also gives investors more information about which trading platforms offer the best deals, and asset managers will have to show investors who is paying for stock research.



A fundamental aim of the original MiFID was to increase competition in share trading by allowing new platforms to take on centuries-old rivals like the London Stock Exchange.