Regulation of the EU Financial Markets: MiFID II and MiFIR (Oxford EU Financial Regulation)

This book provides a comprehensive and expert examination of the Markets in Financial Instruments Directive II, which comes into force in January 2018 and will have a major impact on investment firms and financial markets. It offers detailed guidance on interpretation of MiFID II, its measure and aims which include: to increase transparency; better protect investors; reinforce confidence; address unregulated areas; and ensure that supervisors are granted adequate powers to fulfil their tasks. After a thorough overview of the various innovative features of the new legislative framework in comparison with the former MiFID, the book's chapters are grouped thematically to cover the following areas: general aspects; investment firms and investment services; trading; supervision and enforcement; and reform perspectives. Offering high-quality analysis of both the theoretical and practical aspects of MiFID II, this book is an essential guide to this major EU legislation. It brings together the expert opinions of leading practitioners and legal and economic scholars with access to practice, providing a variety of perspectives on the new regime and the likely effect of the increased regulation. Title Page Copyright Page Contents Table of Cases Table of Legislation List of Abbreviations Author Biographies I General Aspects 1. Who’s Afraid of MiFID II? An Introduction I. Introduction II. Investment Firms and Investment Services III. Trading IV. Supervision and Enforcement V. The Broader View and the Future of MiFID VI. Final Remarks II Investment Firms and Investment Services 2. The Scope of MiFID II I. Introduction II. Investment Firms under MiFID II III. Credit Institutions IV. Investment Firms under the CRR V. Structured Deposits VI. General Exemptions to MiFID II Applicability VII. Trading on Own Account VIII. Dealings in Emission Allowances IX. Financial Instruments X. Insurance Companies and Insurance Intermediaries XI. Managers of Collective Investment Undertakings XII. Data-Reporting Service Providers XIII. Market Operators XIV. Conclusion 3. Governance of Investment Firms under MiFID II I. Introduction II. Governance-related Regulation of Investment Firms between Prudential and Conduct-of-Business Regulation III. The Technical Framework under MiFID II IV. Conclusions 4. The Overarching Duty to Act in the Best Interest of the Client in MiFID II I. Introduction II. Antecedents of the Investment Firm’s Duty to Act in the Best Interest of the Client III. The Duty to Act in the Best Interest of the Client in MiFID II IV. The Duty’s Functions and Contents V. The Articulation of the Duty with Respect to Individual Services and Activities VI. A Look Across the Atlantic VII. Assessment 5. Product Governance and Product Intervention under MiFID II/MiFIR I. Introduction II. Product Governance III. Product Intervention IV. Conclusion 6. Independent Financial Advice I. Introduction II. Economic Background III. MiFID I IV. MiFID II V. Conclusions 7. Conflicts of Interest I. Foundations of the Regime II. The Regime by Single Stages and Examples III. Conclusion 8. Inducements I. Introduction II. Current Legislation III. The Dutch Inducement Ban IV. The UK Inducement Rules V. MiFID II VI. Research as an Inducement VII. Conclusion 9. Agency and Principal Dealing under MiFID I and MiFID II I. Introduction II. Four Transaction Types III. Investor Protection IV. Acting as Agent or as Principal: Not a Justified Distinction to Serve as a Basis for Determining the Degree of Investor Protection V. Conclusion 10. MiFID II/MiFIR’s Regime for Third-Country Firms I. General II. Scope of MiFID II/MiFIR’s Regime for Third-Country Firms III. Eligible Counterparties and Per Se Professional Clients IV. Retail Clients and Opt Up Professional Clients V. Retail Clients, Professional Clients, and Eligible Counterparties VI. Initiative Test VII. Conclusion III Trading 11. Governance and Organization of Trading Venues: The Role of Financial Market Infrastructure Groups I. Introduction II. Trading Facilities: Concept and Regulatory Framework III. The EU Scenario of Trading Venues IV. FMI Groups in an MiFID II World V. Conclusion 12. EU Financial Governance and Transparency Regulation: A Test for the Effectiveness of Post-Crisis Administrative Governance I. Transparency Regulation and EU Financial Governance: Why It Matters II. Transparency Regulation and EU Financial Governance III. MiFIR, Transparency, and Supervisory Administrative Governance IV. MiFIR, Transparency, and Administrative Regulatory Governance V. Conclusion 13. SME Growth Markets I. Introduction II. Existing Alternative Markets for SMEs in Europe III. SME Growth Markets under MiFID II IV. Alternative Disclosure Obligations? V. What Role for the ‘SME Growth Market’ Label? Some Reflections on Alternative Scenarios VI. Conclusion 14. Dark Trading under MiFID II I. Introduction II. Dark Pools: Motivation, Classification, and Related Literature III. Dark Pools under MiFID I IV. Dark Pool Regulation under MiFID II/MiFIR V. Summary 15. Derivatives: Trading, Clearing, STP, Indirect Clearing, and Portfolio Compression I. Introduction II. The Trading Obligation III. The Clearing Obligation IV. The Straight-Through-Processing Obligations V. The Obligations in Respect of Indirect Clearing VI. The Obligations in Respect of Portfolio Compression VII. A Few Final Remarks 16. Commodity Derivatives I. Introduction II. Features of the Commodity Derivatives Markets and Its Relation to the Crisis III. Overview of the Most Important EU Provisions on Commodity Derivatives IV. The Regulatory Perimeter of the MiFID II/MiFIR Package V. The New Position Limits Regime VI. A New Set of Intervention Powers for Authorities and Trading Venues VII. Conclusion 17. Algorithmic Trading and High-Frequency Trading (HFT) I. Introduction II. Algorithmic Trading III. High-Frequency Trading IV. Conclusion 18. MiFID II and Equity Trading: A US View I. Basic Building Blocks II. High-Frequency Trading III. Dark Pools and Internalization IV. Conclusions: Reflections on Issues Raised by MiFID II IV Supervision and Enforcement 19. Public Enforcement of MiFID II I. Introductory Remarks II. Structure of the Study III. Competent Authorities: General Aspects, Powers, and Redress Procedures IV. Cooperation Arrangements V. Concluding Remarks and Assessment 20. The Private Law Effect of MiFID I and MiFID II: The Genil Case and Beyond I. General II. May Civil Courts Be Less Strict Than MiFID I and MiFID II? III. May Civil Courts Be Stricter Than MiFID I and MiFID II? IV. May Contracting Parties Be Less Strict Than MiFID I and MiFID II? V. May Contracting Parties Be Stricter Than MiFID I and MiFID II? VI. Influence of MIFID I and MiFID II on the Principle of Relativity VII. Influence of MiFID I and MiFID II on Proof of Causation VIII. Influence of MiFID I and MiFID II on a Contractual Limitation or Exclusion of Liability IX. MiFID I and MiFID II Assessments by the Courts of Their Own Motion in Relation to Private Investors? X. Conclusion V The Broader View and the Future of MiFID 21. MiFID II in Relation to Other Investor Protection Regulation: Picking Up the Crumbs of a Piecemeal Approach I. Introduction II. MiFID II versus IDD III. MiFID II and IDD versus UCITS KII and PRIIPs KID IV. Cross-Selling Practices V. Conclusion 22. Shadow Banking and the Functioning of Financial Markets I. Introduction II. Shadow Banking: Concept and Terminology III. Non-Regulated Activity According to the FSB Approach IV. What Financial Activity is not Subject to Banking Supervision? V. The European Response to Shadow Banking VI. Conclusion 23. Investment-Based Crowdfunding: Is MiFID II Enough? I. Introduction II. Benefits, Risks, and Challenges III. MiFID I IV. National Approaches to Crowdfunding V. MiFID II VI. Concluding Remarks Index Resumen del editor: "This book provides a comprehensive and expert examination of the Markets in Financial Instruments Directive II, which comes into force in January 2018 and will have a major impact on investment firms and financial markets. It offers detailed guidance on interpretation of MiFID II, its measure and aims which include: to increase transparency; better protect investors; reinforce confidence; address unregulated areas; and ensure that supervisors are granted adequate powers to fulfil their tasks. After a thorough overview of the various innovative features of the new legislative framework in comparison with the former MiFID, the book's chapters are grouped thematically to cover the following areas: general aspects; investment firms and investment services; trading; supervision and enforcement; and reform perspectives.Offering high-quality analysis of both the theoretical and practical aspects of MiFID II, this book is an essential guide to this major EU legislation. It brings together the expert opinions of leading practitioners and legal and economic scholars with access to practice, providing a variety of perspectives on the new regime and the likely effect of the increased regulation." This book aims to analyse and discuss the main changes and new provisions introduced by MiFID II/MiFIR. The book chapters are grouped in a thematic way, covering the following areas: (i) investment firms and investment services, (ii) trading, (iii) supervision and enforcement, (iv) the broader view and the future of MiFID II/MiFIR.