MFA Issues Statement on EU MiFIR Agreement

MFA President and CEO Bryan Corbett issued the following statement regarding the approval of the MiFIR agreement by the Council of the European Union:

“The MiFIR agreement enhances transparency, competitiveness, and efficiency of EU capital markets, benefiting the broader European economy. Providing alternative asset managers with access to affordable, accurate and timely market data will allow managers to better serve their investors, including EU-based pensions and charities.

MFA commends the Council of the European Union for implementing an agreement that will lead to a stronger and more integrated Capital Markets Union.”  — MFA President and CEO Bryan Corbett 

Source: MFA

The Council adopted changes to the EU’s trading rules, which will give investors a better access to the market data necessary to invest in financial instruments and increase the global competitiveness of the EU’s capital markets and ensure a level playing field.

The changes concern the Markets in Financial Instruments Regulation (MiFIR) and the Markets in Financial Instruments Directive (MiFID) which together regulate investment services and financial markets activities in the EU. The aim of the new rules is to empower investors, in particular by making consolidated market data easily available at EU level.

Currently, trading data is scattered across multiple platforms, such as stock exchanges and investment banks, making it difficult for investors to access the accurate and up-to-date information they need to take decisions.

The rules establish EU-level ‘consolidated tapes’, or centralised data feeds for different kinds of assets, bringing together market data provided by platforms on which financial instruments are traded in the EU. The consolidated tapes will aim to publish the information as close as possible to real time.

As a result, investors will have access to up-to-date transaction information for the whole of the EU. This will make it easier for both professional and retail investors to access key information such as the price of instruments and the volume and time of transactions.

The new rules also impose a general ban on ‘payment for order flow’ (PFOF), a practice through which brokers receive payments for forwarding client orders to certain trading platforms. Member states where the practice of PFOF already existed may allow investment firms under its jurisdiction to be exempt from the ban, provided that PFOF is only provided to clients in that member state. However, this practice must be phased out by 30 June 2026.

The review also introduces new rules on commodity derivatives.

This is the final step of the adoption procedure. The texts will now be published in the EU’s Official Journal and enter into force 20 days later. The regulation will apply immediately in all EU countries, whereas the member states will have 18 months to bring into force the laws, regulations and administrative provisions necessary to comply with the directive.

Background

On 25 November 2021 the Commission presented a review of the Markets in Financial Instruments Regulation (MiFIR) and the Second Markets in Financial Instruments Directive (MiFID II), which together regulate investment services and financial markets activities in the EU. The aim of the review is to increase transparency on capital markets, improve competitiveness and ensure a level playing field.

Source: EU Council