MIFID II AN UPDATE IECA GENEVA WINTER SEMINAR 19 NOVEMBER

Transcription

1 MIFID II AN UPDATE IECA GENEVA WINTER SEMINAR 19 NOVEMBER 2015

2 A focus on international commerce

3 Holman Fenwick Willan world office map

4 Today's talk is in 3 (main) parts Introduction & overview Scope of MiFID II Products "Financial Instruments" Services & Activities Exemptions Commodity positions Limits Reporting Management EU access by non-eu firms

5 Regulation of Physical & Financial Energy Financial Competition - State Aid Competition - Anti-Trust Market Abuse e.g. MAR, REMIT REMIT (gas & power) Compulsory Stock Obligation Investment Regulation e.g. MiFID II Derivatives Regulation e.g. EMIR Trade Regulation e.g. Import/Export, Sanctions Environmental Standards e.g. REACH (distillates) Benchmark Regulation Shipping e.g. EHS

6 MiFID II the process MiFID II / MiFIR Directive + Regulation Adopted mid-2014 Applies to markets and firms from 3rd January 2017 Delay/phase-in? Level 2 regulations ESMA technical advice, Dec '14 & draft TS, mostly Sept 2015 Commission regulations awaited Adoption process/objection rights Level 3 guidelines, Q National implementation in development CPs in UK & Germany

7 MiFID II delay? Go live date currently 3 January 2017 Potential 1 year delay ESMA & Commission suggestion to EP's ECON Committee last week Legislators to decide, not issue for supervisors No legislation yet formally proposed Tensions EP sceptical Commission does not want substantive changes - potential Pandora's box Potential compromise = phase-in e.g. Implement MiFID financial instruments scope - EMIR trade reporting captured and MAR - data for Ancillary Activities exemption Rumours of MiFID II's complete delay are probably exaggerated Carry on planning & preparation

8 Key MiFID II impacts in commodities arena Many energy and commodity trading businesses will be brought into mainstream financial regulation Broader product scope; narrower exemptions from authorisation Governance, conduct, operational & capital implications New position controls on such businesses Whether or not authorised/regulated, but more severe on firms that are More trading on regulated venues & subject to transparency rules Impact on trading arrangements & liquidity Broadens scope of EMIR, market abuse & other regimes through wider definition of "financial instrument" Regulated firms denied safe harbours Careful planning required to mitigate impact Corporate and/or trading structures Solution locate in Switzerland / Singapore!

9 MiFID impacts other regimes, especially their scope EMIR MAR / CSMAD MiFID II / MiFIR REMIT

10 MiFID II - 5 main types of reform Scope More products, fewer safe harbours more firms/venues & business captured** Knock-on effect on scope of other regimes, e.g. EMIR, CSMAD/MAR Radical new rules on market structure and trading activity, including transparency Markets Commodity positions Investor protection Supervisory convergence Detailed regime for monitoring and management, including position limiits Stronger investor protection - not just conduct rules and not just for retail clients New access requirements for third country firms** System to achieve stronger cooperation between national authorities Intervention and enforcement powers and penalties

11 What is changing? Commodities Market structure Transparency Narrower exemptions from authorisation Broader range of commodities transactions in scope "derivatives"? Knock-on effect on scope of EMIR and MAR Position limits, management, reporting & disclosure New trading venue category: Organised Trading Facility (OTF) "Systematic internaliser " to include non-equities, e.g. commodities Mandatory trading of cetrtain derivatives on organised venues New rules for venues & CCPs, recognition of non-eu venues Harmonised EU regime for access to trading venues, CCPs & indices Controls on algorithmic/high frequency trading New transparency requirements for non-equities including commodities Increased equity market transparency requirements Consolidated tape for equities and, from 2019, non-equities Extension of transaction reporting, even beyond current UK regime

12 and what else? Conduct Supervision & Enforcement Third country firms' access Some big changes, many small changes Conflicts of interest, including inducements and remuneration Best execution Safeguarding client assets, & restrictions on TTCA Product governance: manufacture & distribution Information for & reporting to clients Suitability, appropriateness and independent advice Stronger supervisory powers (ESAs / NCAs) especially intervention to restrict/ban activities / practices or marketing / sale of certain instruments Stronger administrative sanctions Harmonised approach Maximum fines 10% of group turnover (or 5m) Some harmonisation of Member State access requirements Retail & elective professional clients: MS may require branch or (as UK proposes) apply existing national rules Per se professional clients & ECPs: harmonised thirdcountry equivalence regime for cross-border services Register + TC equivalence + TC reciprocity + TC MoU

13 Extension of scope "financial instruments" Annex I, Section C widened, in particular Cash-settled C5 derivatives no material change Physically-settled commodity derivatives traded on RM/MTF (C6) MiFID II extends this to OTF-traded products except - "Wholesale energy products" (WEPs) covered by REMIT, traded on OTF and which "must be physically settled" N.B. forwards still not expressly mentioned (but ESMA considers caught) WEPs = gas & power (+ transport/storage) & derivatives thereof Other commodity derivatives that can be physically settled (C7) If not for commercial purposes, but note ESMA interpretation - Contracts spot, if understanding between parties that delivery postponed - Includes contracts equivalent to contracts on EU/non-EU venues (including OTFs) without need for contract to refer "expressly" to such equivalence Exotic derivatives (C10) (e.g. weather, freight, capacity, emissions) Extended to OTF-traded products & clearing/margin criterion deleted Emissions allowances physicals added as C11, derivatives moved to C4

14 Physical settlement "must be physically settled" used in two contexts WEPs exempted from C6 if traded on OTF and C6 energy derivatives (coal & oil) potentially entitled to EMIR grace period - Exemption from clearing threshold & clearing/risk management obligations ESMA Technical Advice proposes meaning (ESMA Final Report, Dec 2014) Contract establishes unrestricted & unconditional right to deliver/take delivery It is not possible for either party to replace physical delivery with cash settlement Obligations "cannot" be offset vs those under other contracts between the parties - n/a to operational netting arising from nomination under TSO rules This characterisation not prevented by provisions for force majeure, "bona fide inability to settle" (defined), default clauses providing for compensation "physically settled" to be defined in Level 2: ESMA proposes Physical delivery of goods or document of title Other methods of transferring "rights of an ownership nature" that entitles recipient to relevant quantity of goods - e.g. notification/scheduling/nomination to TSO/ mandated operational netting

15 MiFID I Commodity exemptions: Changes ahead Commodity exemptions curtailed In particular Commodity dealers exemptions deleted article 2(1)(k) Ancillary business exemption restricted art. 2(1)(i) Own account dealing exemption restricted art. 2(1)(d) - Only non commodity/emissions instruments - No DEA to trading venues: problem for corporate treasurers especially in FX These 3 (and intra-group exemption) are widely used by utilities, energy companies & other commodity traders But some new exemptions Operators with ETS compliance obligations, dealing on own account - But not their affiliates TSOs & gas/power infrastructure operators/administrators Certain mutual entities that provide hedging services for local electricity undertakings, or operators under the EU Emissions Trading Scheme - Optional exemption (UK probably won't implement) this)

16 Ancillary Activity exemption 1 Tailoring exemptions to asset classes 2.1(j) for commodities & emissions; 2.1(d) for other financial instruments (d) and (j) can be combined, e.g. relying on latter for treasury risk management N.B. "Commodity derivatives" now includes "exotics" (C10) for some purposes Own account and investment services limbs now distinguished Own account dealing limb Client order execution not permitted, but market making expressly included Investment services limb Services (excluding own account dealing) to customers or suppliers of their [group's] main business Exclusions: Main business banking/investment services/commodity derivatives market making High frequency traders. Must notify NCA to be able to make use of exemption! NCA may review e.g. to check hedging qualifies. Non-EU firms: which NCA?

17 Ancillary Activity exemption 2 Tests involve applying 2 ratios Market share test "Speculative activity" in commodity asset class / EU market activity 8 asset classes: metals, oil/products, coal, gas, power, agricultural products, other (incl. freight & C10), emissions allowance/derivatives Asset class thresholds range from 3% (oil/products) to 20% (emissions) Big change in values from CP Main business test Completely changed from ESMA's December 2014 CP Capital employed criterion dropped: instead another form of trading activity test "Speculative activity" / Overall activity in MiFID II Financial Instruments Ignores: trading in physical commodities (in contracts which are not MiFID II FIs), non-mifid business and fixed assets

18 Ancillary activity exemption 3 Both tests look at gross notional value ( ) of Group activity in EU "Speculative activity" excludes: Privileged Transactions Transactions intra-group, for hedging or to fulfil liquidity obligations Transactions by authorised firms in group Tests based on simple average over 3 annual calculation periods Phase-in derogation until July 2018 Backstop to ensure "only relevant and sizable participants in European commodity derivative markets" are not able to use AA exemption Main business test result is combined with the market share test higher speculative activity lower EU market share to qualify for exemption N.B. Your trades could already impact your MiFID II status!

19 Ancillary exemption 3: Main Business test "backstop" < 10% of total trading activity relevant size of trading activity > 10% and < 50% of total trading activity > 50% of total trading activity Ancillary Activity < 50% of threshold for the total EU trading in comm. der. Ancillary Activity > 50% of threshold for the total EU trading in comm. der. Need to apply for authorisation < 20% of threshold for the total EU trading in comm. der. Ancillary Activity > 20% of threshold for the total EU trading in comm. der. Need to apply for authorisation

20 Some Key Issues Intra-group transactions Transactions between EU and non-eu affiliates EMIR equivalence Hedges: OTC and RM traded derivatives EMIR test Calculations What data to use? Data unlikely to be available when it is needed Now for planning but at latest by July 2016 / 3 January 2017 Data on commodity derivatives that are outside scope until 3 January 2017 Hostage to market fluctuations? Asset classes appropriate? Freight may dominate "other derivatives" category Cost of monitoring exemption

21 Trading Structures 1 Current example Parent Company (EU/Non-EU) Shareholding Energy Co (UK) Limited Counterparty X Swap Transaction (UK Principal) (Unauthorised) MiFID Exempt: Art 2(1)(i) & (k) (UK FSMA Exempt: RAO, Art 16) Services Agreement Trade negotiated & concluded Subsidiary Agent/Arranger (FSMA Authorised) MiFID Exempt: Art 2(1)(b): intra-group services Art 2(1)(i): ancillary services

22 Trading Structures 2 Post MiFID II (very) simplified example Ultimate Parent Holding Company EU Holding Company Energy Co (UK) Limited Parent & Booking Vehicle (Principal) MiFID II Exempt Art 2(1)(i) Intra-group Transactions Counterparty X (EU Principal) (Unauthorised?) Transactions Transactions Affiliated Dealer/Agent/Arranger Transactions Non-EU Company Ex-EU Transactions Non-EU Company Affiliate of Company X (Non-EU)

23 Extension of scope Impact of MiFID II changes in exemptions / instruments [Some] unregulated firms will now need authorisation Implications discussed already Client categorisation of currently unregulated firms may change And counterparty status under EMIR Even those remaining unregulated e.g. Commodity dealers professionals Regulated firms may need change of authorisation scope e.g. to operate an OTF Impact on EMIR: in effect broadens EMIR's scope Expands instruments covered & scope of financial counterparties Transitional for C6 oil / oil products & coal derivatives Market abuse, especially MAR MAR effective 3 July 2016, but covers more instruments from 3 Jan 2017 Market manipulation applies also to "spot commodity contracts" as defined

24 Becoming authorised for the first time > MiFID II Ancillary Activity threshold? Other exemptions insufficient? Restructuring, with or without a MiFID II authorised firm Application process Detailed forms and business plan Financial projections [Applications for individuals] Capital resources once CRR transitional exemption expires / sooner under national regimes Hedge deductions not available (e.g. EMIR & position limits) But EMIR transitional for certain oil & coal derivatives Financial counterparty for other EMIR purposes Governance including systems/procedures, remuneration controls Conduct rules Trading & transparency

25 Planning for MiFID II in commodities arena If you are not authorised (e.g. under FSMA in UK) Can you remain unauthorised? Implications of trying to do so? Implications of authorisation If authorised but MiFID exempt, can you remain outside regime? Key issues to consider include Scope of MiFID instruments Ability to restructure: tax, capital, 3rd -country access, venue participation Impact of position limits inside versus outside MiFID regime Time to obtain authorisation If already within MiFID, focus on position regimes, transparency, venue status, capital Though many other conduct & other requirements also more onerous MiFID II is a strategic project, not just about compliance Particularly for commodity market participants Start Now!!!

26 CRD IV/CRR own funds requirements Capital requirements are major concern of commodities firms who Are already authorised under MiFID I May require authorisation under MiFID II EU exemptions for "commodities dealers" who were not regulated under ISD at 31 December 2006 CRR, article 498 Expires 31 December 2017 at latest Commission required to report in 2015 on Appropriate prudential regime for such firms Desirability of separate category of such firms exclusively dealing in energy supplies (including electricity, coal, gas and oil) Similar exemption from CRR large exposures requirement - CRR, article 493 Potential extension of exemptions to 2018 or 2020 If 2020 EBA would be mandated to provide technical advice and legislative proposals for an appropriate regime Potential impact of current Basel projects, e.g. review of trading book and CVA N.B. Capital requirements in UK (and elsewhere)

27 Commodity derivatives positions Commodity position limits Overview Responsibilities Affected positions Calculation Hedging exemption Territorial scope Changes from ESMA CP of December 2014 US proposals Positions Reporting Position Management

28 Commodity position limits - overview Position limits for commodity derivatives traded on RM/MTF/OTF Limits will apply at group level to aggregate net position held by or for a person & subsidiaries in the contract for which the limit is set + any "same" RM/MTF/OTF contract + any "economically equivalent OTC contract" Exemption available for hedge positions of non-financial entities

29 Commodity position limits 1 - Responsibilities National regulators (NCAs) to determine limits for each commodity derivative traded on a RM/MTF/OTF Applying ESMA methodology Reviewable when significant market changes Regulator of venue with largest volume of trading in same derivative "central competent authority" Limits to be published on ESMA website Additional powers for national regulators include Imposition of temporarily more restrictive position limits - Article 58 specifies reasons and processes - NCAs other than central CA can impose? Position management & reporting (see below) Imposition of sanctions for position limit infringements ESMA powers

30 Commodity position limits 2 Affected positions Limits will apply to a "person" at group level to Aggregate net position in derivative for which limit is established: + "same" contracts on EU RMs / MTFs / OTFs + "economically equivalent" OTC contracts (EEOTCs) Long and short positions to be netted So what positions can be taken into account and netted is critical - But meaning of "same" and "EEOTC", and what venues /contracts included is to be very narrowly defined - Effectively to require identical legal terms - ESMA will not provide a list EEOTCs or same derivatives Positions held by (or on behalf of) a person and its subsidiaries, but Taking into account the whole position of partly-owned subsidiaries potential for double-counting Any particular entity will not including parent or sister companies But they must calculate their aggregate positions (even if holding none directly) Hedge exemption for non-financial entities (NFEs) (see below)

31 Commodity position limits 3 - Calculation 2 limits to be established: Spot month & Other months Spot (nearest maturity even if < 1 month): spot limit < other months' limit Limits cover physical & cash-settled derivatives ESMA proposes that limits be assessed by reference to a baseline Baseline proposed = 25% x deliverable supply (spot), x open interest (other) "Deliverable supply": "commodity that will be used either as settlement for or as a pricing reference to, that commodity derivative contract." Baseline adjustable +/- by NCAs, depending on impact of 5 factors - Up to 35% of deliverable supply / open interest OR - Down to 5% of deliverable supply / open interest - But higher / lower limits possible for new or illiquid contracts or markets 5 Factors - Maturity of the commodity derivatives contracts - Deliverable supply - Number of market participants - Characteristics of the underlying commodity market - New & illiquid contracts; 2,500 lot limit

32 Commodity position limits 4 Hedging Exemption Available to Non-Financial Entities (NFEs), EU and third country To exclude hedges from position limit calculations must apply for exemption to NCA of trading venue EMIR interpretation to be applied "objectively measurable as reducing risks directly related to NFE's commercial activity" ESMA maintains this is a limited exemption for specific positions "not a universal exemption for certain types of persons" Person may be eligible for an exemption under certain contracts, but not others contract-by-contract exemption cf MiFID II, recital 127 Process Notify NCA of the trading venue in question NCA has up to 21 calendar days to consider If breach limit and exemption refused enforcement action

33 Commodity position limits 5 -Territorial Scope Position Limits will apply to: Commodity derivatives traded on EU venues (RMs, MTFs, OTFs) Whatever the location of the member, market participant, client Position Limits will not apply to Commodity derivatives traded on non-eu venues (equivalent to above) Affected participants EU financial and non-financial entities trading in EU commodity derivatives Non-EU financial and non-financial entities trading in EU commodity derivatives Treatment of "same" contracts on non-eu venues EEOTC contracts traded by non-eu persons

34 Commodity position limits 6 Changes from ESMA CP Changes from ESMA's December 2014 CP include: ESMA accepts open interest as basis for position limits for other months; Clarification of what is "spot month"; Narrower definitions of "EEOTC" and "same commodity derivative"; Tighter limits: baseline of 25%, CAs able to adjust to 5%-35%; Separate provisions for new and illiquid contracts and securitised commodity derivatives; CAs to approve hedging exemptions in 21 days Enforcement risk if breach limit and approval not received New threshold for "significant" trading volumes. No change to full aggregation of part-owned subsidiaries Limited exception for certain investment managers and funds

35 Commodity position limits 7 US proposals Position limits first proposed in 2011 but vacated in 2012 following court challenge Final rules have not yet been set: CFTC proposal was open for comment (for third time) until 28 March 2015 Modified proposal awaited Major difference with the EU: only 28 "core" physical commodity contracts are proposed to be subject to position limits Key point is how "hedging" is defined in the position limit proposal industry is concerned that the proposal narrows the definition of hedging, such that some hedging will be subject to position limits (rather than being excluded from position limits)

36 Commodity Positions Reporting Applies to both emissions allowances/derivatives & commodity derivatives Position limits apply only to commodity derivatives Commodity position reporting by RM/MTF/OTF operators Commitment of Trader Report (COTR) Weekly public disclosure of aggregate positions by holder category - Showing for each category the no of persons, no of long & short positions differentiating hedges, and % of open interest - Categories: banks/investment firms, funds, other FIs, commercial undertakings (& operators with emissions compliance obligations) Required if no. of position holders & open positions > thresholds Similar to some exchanges' existing COTRs Detailed breakdown to national regulator ( daily) Require participants to provide necessary data ( daily) Market members/participants (including non-eu), clients, clients of clients, etc. through to the ultimate/end client Firms must also report positions to relevant NCA if trade OTC

37 Commodity Positions Management Commodity positions management by venue operators Must control positions need powers to Monitor and investigate positions Require termination or reduction, or holder to provide liquidity Must have transparent, non-discriminatory policies CMECE, LME, ICE/LIFFE & others already have powers under their rules Exchange limits / management regimes may coexist Commodity position management by national regulator Impose temporary, more restrictive position limits Require any person to provide info on a position, or to reduce it Limit opening or increase of positions ESMA to manage positions as a last resort Requesting information from any person Requiring a person to reduce its position Limiting a person's ability to enter into commodity derivatives.

38 Summary / Conclusions Position limits to apply to commodity derivatives (including exotics): MiFID II venue-traded derivatives and EEOTC Applies to a person and their group (subsidiaries only) Extra-territorial reach NCA s to determine the position limits, by reference to a 25% baseline 25% of deliverable supply / open interest Adjustable +10 or - 20 in light of specified factors Exchanges' own position limits may still apply Exemption available for hedges for non-financial entities But pre-approval process may render it useless, while exceeding limits in expectation of approval may be risky Three levels of commodity position management Reporting obligations (covering emissions & commodity derivatives) for venue operators and firms Numerous issues still need to be resolved

39 Non-EU access to EU

40 Overview Harmonisation of rules on non-eu ('third country') firms dealing with EU clients & counterparties Especially dealings with eligible counterparties (ECPs) and services provided to per se professional clients But national rules apply until EC makes equivalence decision Very limited harmonisation of framework for business with retail & elective professional clients EU branch may be required So client categorisation critical for third country firms (TCFs) dealing with EU Rules vary also according to: Whether TCF establishes branch or seeks to deal cross-border Whether EU client/counterparty is solicited in any way Provisions split between in both MiFID II and MiFIR Other MiFID II/ MiFIR provisions affect third country entities

41 Existing Position under MiFID I MiFID I No harmonised EU regime for third country access. Individual MS have own national regimes: UK: RAO regime for overseas persons TCF must receive no better treatment than EU firms. MS may authorise TCFs to establish a branch in a MS But no passporting rights into other MS for that branch; Only EU-authorised entity can enjoy passporting rights.

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43 Regime for Retail and Elective Professionals Member States "may require that a third country firm intending to provide investment services or perform investment activities [ ] to retail clients or to [elective] professional clients in its territory establish a branch in that Member State". Prior authorisation must be obtained Requirements before granting authorisation: TCF to be authorised and supervised in TC for relevant services Cooperation arrangements between the regulators to be in place Branch to have sufficient capital Management to comply with certain CRD IV requirements Tax information exchange agreement between TC and host MS Firm to belong to investor compensation scheme MS cannot impose more requirements on operation/organisation of branch than required under MiFID II (but will not have preferential treatment vis-a-vis EU firms). Narrow exception for unsolicited business: Services/activities provided to EU client on basis of the latter's "own exclusive initiative".

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45 Regime for Professionals / Eligible Counterparties 1 TCF can provide investment services and perform investment activities on a cross border basis, without a branch. However, TCF must be registered with ESMA to provide investment services/perform investment activities throughout the EU: Commission decision that home country (legally binding) regulation covering prudential and business conduct requirements has "equivalent" effect to requirements in MiFID II and CRD IV. - Part of equivalence assessment relates to reciprocal access between TC and EU. TCF must be authorised in TC. Cooperation agreements between ESMA and third country regulator. Provision of investment services or activities on the basis of "own exclusive initiative" not prohibited. However: narrow scope for this exemption

46 Regime for Professionals / Eligible Counterparties 2 Registered TCF to inform clients in advance: It can only provide investment services to Professionals and ECPs; It is not supervised by EU regulators; The name of its TC home regulator; Of option to submit disputes to local EU court or arbitral tribunal. Registered TCFs will not be subject to additional requirements than those set out in MiFID II/MiFIR (but will not have preferential treatment vis-a-vis EU firms).

47 Passporting by third country firms a new opportunity

48 Passporting by third country firms a new opportunity TCFs with an EU branch authorised under MiFID II may provide investment services & activities to ECPs and per se professional clients in the EU without establishing new branches Provided EC has adopted equivalence decision for TC Branch to give passport notice to branch regulator Branch will be subject to the supervision of its EU Branch MS: - Branch MS and host MS to may establish cooperation arrangements to ensure appropriate level of investor protection.

49 Interim Regime Professional Clients & ECPs: Existing national regimes on third country access to continue for three years after Commission "equivalence" decision is put in place. Where there is no Commission "equivalence" decision in place (or is no longer in effect), MS may continue to apply national regime to third country access. No transitional provisions for Retail and Elective Professional Clients

50 Case Study 1 Current position under MiFID I EU commodity dealer counterparty Third Country Commodity Trader Assume = own account commodity/commodity Commodity dealers exemption in MiFID derivatives dealer within Article 2(1)(k) exemption Overseas persons exclusion in UK

51 Case Study 2 Interim position under MiFID II Third Country Commodity Trader Assume Group's relevant EU commodity business > Ancillary Activity Exemption threshold(s) EU commodity dealer counterparty Overseas persons exclusion in UK Potential restrictions on access to non-uk ECPs & per se professionals counterparties because existing access may depend on TCF being MiFID exempt?

52 Case Study 3 Post-transitional position under MiFID II Third Country (Swiss) Commodity Trader Assume Switzerland =equivalent Group's relevant EU commodity business > Ancillary Activity Exemption threshold(s) Not authorised in Switzerland not registered with ESMA EU commodity dealer counterparty Potential restrictions on access if TCF not authorised And whether or not EU counterparty is authorised under MiFID

53 Application of MiFID II to third country firms / entities Authorisation / registration Transparency Orders / transactions etc. with EU firms are subject to MiFIR TCF not responsible for MiFIR reporting Trading obligation EU FC/NFC+ (EU) transactions with TC FIs/ or TC-equivalent FC/NFC+ Transactions between TC FIs / TC~FCs/NFCs+ If "direct, substantial & foreseeable effect within the EU" ESMA proposes to interpret this as: - If EU FC guarantee - If between two EU branches of non-eu FCs Third country entities Position limits Position reporting Third country venues

54 Conclusions TCF dealings with EU ECPs and per se professionals MiFIR regime = medium-long term depends on equivalence interim regime key for 4-5 years, probably much longer TCFs should understand local requirements in relevant EU MSs - MiFID II-exemption status likely to be critical KYC will be critical Apart from authorisation/registration, third country firms will be affected by a range of MiFID II / MiFIR provisions e.g. position limits and reporting MiFID II delay Phase-in of some provisions is more likely than complete postponement Carry on planning & preparation - Start by assessing exemption availability across your group - Do your hedging arrangements qualify under EMIR / MiFID II?

55 A focus on international commerce

56 MIFID II AN UPDATE IECA GENEVA WINTER SEMINAR 19 NOVEMBER 2015