The European Parliament passed updated rules for the Markets in Financial Instruments Directive, dubbed MiFID II, last night.
Legislative approval of the new rules means the European Securities and Markets Authority (ESMA) can begin the process of consulting on how best to implement the measures proposed in the directive, officially called the level 2 phase of the legislation.
The new rules are expected to be published in the Official Journal of the European Union later in the second quarter and will come into force within 30 months of the publication date, putting the implementation deadline sometime in late 2016.
Among the most controversial rules are caps on dark pool trading, pre-trade transparency for non-equity asset classes and controls on algorithmic trading. Additionally, it introduces a new type of regulated trading venue, the organised trading facility, which will be used to trade non-equity instruments including derivatives.
Commenting on the vote, European internal market and services commissioner, Michel Barnier, said: “Our legislation needs to keep pace with the changes in financial markets and implement our G20 commitments. The new rules will improve the way markets function in order to serve the real economy.
“They will establish a safer, more transparent and more responsible financial system and restore investor confidence in the wake of the financial crisis.”
ESMA is expected to publish its first consultation paper on MiFID II implementation in May.