MiFID II in South Asia

MiFID II and Non-European Entities

The impending MiFID II is being touted as the most extensive shake-up of financial services for a generation. It’s a European regulation, but companies all over the world should care about it.

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MiFID II Blog

New regulations require financial institutions to access high quality market data, both real-time and historical. How can firms get the information they need?

Will MiFID II cause a financial earthquake on 3 January, 2018? The shockwaves for markets will be more severe if firms treat compliance as a box-ticking exercise rather than commercial imperative.

The Markets in Financial Instruments Directive (MiFID II) is set to make substantial regulatory changes to European Union (EU) financial markets. While this complex regulatory regime directly affects EU investment firms, it will have a ripple effect that may leave many firms outside the EU struggling to comply with its requirements.

Impact of MiFID II for Non-European Based Firms

Because of the cross-border nature of today’s investment environment, MiFID II implementation will impact firms around the world that deal either directly or indirectly with Europe to varying degrees.

Specifically, non-European entities are impacted by what is known as a “beneficial” or “exposed” paradigm:

  • they are either beneficial (ultimate) owners of European-based companies, or beneficiaries of funds or portfolios of European investments; or 
  • they have “exposures” by the holding, investing, trading of MiFID II-mandated European assets that are held, bought or sold on European regulated exchanges and platforms

To learn more about how your firm may be impacted by MiFID II download our latest whitepaper, "Impact of MiFID II for non-European based firms."

MiFID II checklist

6 key business use cases

Use case Summary Impact
Market Risk & Price Discovery Huge volume of data generated as a result of MiFID – supports Risk Management & Price Discovery Some direct impact but also indirect impact on Asian clients Opportunity to sell new data / content
Best Ex, TCA, Quant Best Ex driving needs for transparency around client execution and service Best Ex driving needs for transparency around client execution and service
Transaction reporting MiFID II requires firms to report Trades and Transactions Direct requirement on EU HQ firms and firms who have to trade report Data can improve price discovery and risk management
Buyside & research unbundling Buyside firms need to show transparency around the cost of research Direct impact on all EU Buyside firms and EU domiciled funds (e.g. UCITS compliant)
Non-MTF Asian firms that trade on EU venues will have trades reported. We may set up non-MTF for non reporting Direct – Asian clients may choose to trade on non-MTF Thomson Reuters decision on setting up non MTF pending
Systematic Internalizer Services Firms that provide liquidity and make markets classified as Systematic internalizers Direct impact on price makers. Likely to affect small group of Asian clients

Upcoming global events

How do you solve the data problems of MiFID II and FRTB?

Approaches for 2018, and who is ready?

News on MiFID

The European Securities and Markets Authority (ESMA) has published today the Final Report on product governance guidelines under MiFID II regarding the target market assessment by manufacturers and distributors of financial products.

Some global investment banks risk losing up to $240 million in business by 2020 as a regulatory overhaul, which will change the way securities research is priced and used, makes independent firms more attractive for clients, a financial consultancy said.

European asset managers could cut their research budgets by more than 100 million euros a year after a major regulatory overhaul of the securities trading industry goes into effect next January, a survey by Greenwich Associates found.