Oslo
06 November 2017
Reporter: Jenna Lomax

MiFID II creates “much uncertainty” for EEA members


European Economic Area (EEA) members remain in the dark over the EU’s authority to impose the second Markets in Financial Instruments Directive (MiFID II) after the January 2018 deadline, according to Finanstilsynet, the Norwegian supervisory authority.

Finanstilsynet plans to implement MiFID II into law in line with next year’s deadline in order for Norwegian institutions to maintain parity with their peers based in member states, despite the the rules not being incorporated in the EEA agreement.

In a statement on the country’s regulatory roadmap, Finanstilsynet said: “[We] will in the near future adopt the Norwegian regulations as announced. However, much uncertainty relates to the European Securities and Markets Authority’s (ESMA) assessment of the EEA legal basis for ESMA's treatment of Norwegian trading venues and investment firms.”

For EEA members, ongoing equal treatment is dependant on the decisions of ESMA.

ESMA will be responsible for adding Norwegian financial services to its list of institutions that meet necessary requirements related to MiFID II and the accompanying regulation, MiFIR, immediately after the implementation date.

Finanstilsynet’s concerns highlight problems that other third-party members and neighbouring economies will face in the future, such as the UK, which will face similar issues in the years to come amidst the uncertainty surrounding Brexit negotiations.

The UK’s Financial Conduct Authority (FCA) has indicated it will accept a soft roll out of the second MiFID II, come January.

Speaking at the AFME European Compliance and Legal Conference in September, Mark Steward, executive director of enforcement and market oversight, told delegates: “we [the FCA] have no intention of taking enforcement action against firms for not meeting all requirements straight away where there is evidence they have taken sufficient steps to meet the new obligations by the start-date, 3 January 2018.”

The looming pressures of Brexit mean that the FCA is unlikely to increase its investigative work against potential financial misconduct as the extra resources that would require are not feasible.

Deutsche Boerse subsidiary Clearstream confirmed it will continue to offer stable custody services to its UK-based clients no matter how the Brexit negotiations evolve.

Clearstream outlined its existential incentive in maintaining and nurturing its existing strong and proven relationships with London-based firms in its monthly transaction data report for September.

The international central securities depository said it is preparing for Brexit by joining forces with all other entities of Deutsche Boerse Group.

Despite the uncertainty that came after the referendum result, Clearstream said its main objective through Brexit was to minimise risk of cross-border settlement.

Though, it is unclear how Clearstream and other financial services providers will be able to provide for their UK clients if the current Brexit negotiations fail to yield a viable deal for financial services to operate across the channel after the March 2019 deadline.

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