MiFID II delegated Regulations—organisational requirements

MiFID II delegated Regulations—organisational requirements

Following the adoption of a number of delegated Acts containing implementing and regulatory technical standards, Simon Lovegrove, head of financial services knowledge global at Norton Rose Fulbright, examines the key provisions which will impact on the way UK financial institutions organise their business.

Background

While the revised Markets in Financial Instruments Directive 2014/65/EU (MiFID II) and the Markets in Financial Instruments Regulation (EU) 600/2014 (MiFIR) have been delayed by a year and won’t come into effect until 3 January 2018, the first half of 2016 has been a particularly busy period with the Commission adopting a number of delegated Acts that contain regulatory technical standards and implementing technical standards that add further detail to the framework Directive and Regulation. Indeed, many firms have found it difficult keeping pace with the volume of paper being published, so in June 2016 the European Securities and Markets Authority (ESMA) helpfully published a table setting out the status of each technical standard.

What does the Commission Delegated Regulation of 25 April 2016 cover?

On 25 April 2016, the Commission adopted a Delegated Regulation supplementing MiFID II as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of the Directive. Accompanying annexes were also published.

What are the headlines in the Delegated Regulation of 25 April 2016 concerning organisational requirements of investment firms?

Chapter II of the Delegated Regulation of 25 April 2016 (arts 21–43) sets out the organisational requirements for investment firms. In particular it sets out procedures in relation to compliance, risk management, internal audit, the responsibility of senior management, complaints handling, remuneration, personal transactions, outsourcing and conflicts of interest. Each of these topics is important in their own right but the headlines include the following:

  1. investment firms are to establish, implement and maintain systems and procedures that are adequate to safeguard the security, integrity and confidentiality of information,

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