As part of its further efforts to ensure the orderly functioning of the European financial markets and to strengthen investor protection, the Dutch Authority for the Financial Markets (AFM) is putting forward recommendations in connection with the current review of MiFID II (the Markets in Financial Instruments Directive). This is especially important in view of the current market conditions around the world as a result of the corona crisis.
MiFID II, which came into force on 3 January 2018, is currently being reviewed by the European Commission and the European Securities and Markets Authority (ESMA). The aim of MiFID II is to improve the efficiency and transparency of the European financial markets and to strengthen investor protection.
In anticipation of potential changes to the MiFID II regulation, the AFM has carried out a study that includes policy recommendations for the areas of equity, commodities and investor protection. These recommendations are available here. They concern changes to the regulatory framework of MiFID II (level 1 or level 2), suggestions for further ESMA guidance on level 3 and increased European convergence in supervision.
Central underlying themes for equity are whether transparency has increased sufficiently, what the impact is on liquidity and how the market structure has changed, as a consequence of MiFID II. For commodities, we investigated the impact of the introduction of position limits, position management controls and pre-trade transparency requirements for trading venues that trade in commodity derivatives in the Netherlands. The MiFID II regime has enhanced retail and professional investor protection throughout the European Union (EU).