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EU to delay new securities market rules for one year

Xinhua, May 18, 2016 Adjust font size:

European Union member states on Wednesday approved a one-year delay to new securities market rules, which were due to come into effect beginning January of next year.

A recent revision of rules on financial instruments, the so-called Markets in Financial Instruments Directive (MIFID II) and Regulation on Markets in Financial Instruments (MIFIR), set out to promote the integration, competitiveness, and efficiency of EU financial markets.

MIFIR will limit the use of waivers on disclosure requirements and provide for non-discriminatory access to trading venues and central counterparties for all financial instruments. It requires derivatives to be traded on organized venues.

MIFID II will amend rules on the authorization and organizational requirements for providers of investment services and on investor protection. Meanwhile, the directive also introduces a new type of trading venue, the organized trading facility (OTF), which are currently not regulated but are increasingly used.

Both the directive and the regulation were to become applicable on Jan. 3, 2017, with EU member states having to transpose the new directive by July 3, 2016.

However, due to "technical implementing challenges" faced by the European Securities and Markets Authority (ESMA) and by national authorities, essential data infrastructures will not be in place by then, the Council of the EU said in a statement.

With the extension, the deadline for member states to transpose MIFID II into national legislation will be set for July 3, 2017; while the date of application of both MIFID II and MIFIR will be set for Jan. 3, 2018.

The member states' decision followed a provisional agreement with the European Parliament on May 2 and a European Commission proposal in February. After that, a regulation will be adopted to enact the extension. Endit