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The Markets in Financial Instruments Directive (the “MiFID”) has been a piece of legislation which was, and still is, of fundamental importance to financial markets across Europe. Despite this, areas of the financial market in Europe remained opaque and unregulated. Backed by the regulatory success of MIFID as the first step in the right direction, the legislator sought to review MiFID in order to regulate the financial market further with the aim of developing an industry which is more efficient, fairer and safer regulated markets and strengthened investor protection within the European market.

These principles resulted in the updated MiFID being the Markets in Financial Instruments Directive II (the “MiFID II”). This newsletter is the first from a series of newsletters to be published by lecocqassociate with respect to the upcoming MiFID II. lecocqassociate will be publishing frequent newsletters on the subject in order to keep the industry abreast and duly updated with the upcoming changes to be effected with respect to MiFID II.

MiFID II is expected to bring with it a fundamental change in financial markets within the European Union across a wide reaching number of areas. As a result firms currently regulated by MiFID are required to re-assess their business models and undertake implementation efforts. In addition, promoters seeking to set up investment firms in the European Union must now also consider the additional regulatory requirements that will be required to be implemented in their business model with the coming into effect of MiFID II.
As of the beginning of 2017, the MFSA initiated its implementation process of MiFID II and started a consultation process with the financial services industry.


MiFID II is not a free standing regulation and also comes with the Markets in Financial Instruments Regulations (the “MiFIR”). As an effect of the coming in of MiFID II and the Markets in Financial Instruments Regulations (the “MiFIR”), it is expected that firms will have to undertake significant changes in business and operations models, the systems used, the data processed, the people spearheading the firm and the processes employed. This is expected to give rise to a transformation of the industry. It is foreseen that the impact of the changes coming into effect through MiFID II and MIFIR will mostly affect banks, broker dealers and trading venues. That being said, investment managers, investment firms, independent financial advisors, custodian banks and other asset serving entitles will also need to implement changes and undertake efforts to comply with MiFID II and MiFIR.


Calling MiFID II a compliance exercise cannot be further away from the truth. MiFID II is expected to bring forth strategic implications which could enhance market opportunities in Europe and give the early planners a competitive advantage or loss of revenue for those who fail to reach. MiFID II will be aligned to a number of other regulations which are currently being implemented across international faura being global, European and also domestic legal frameworks. This presents an additional challenge to firms who are now required to consider and comply with a multitude of regulations (e.g. Basel III / Capital Requirements Directive, Markets Abuse Directive (MAD), Dodd
Frank, European Market Infrastructure Regulation (EMIR).


MiFID II, as a directive, will come into effect backed by the MiFIR. This framework was adopted by the European Union in order to ensure that there is a framework which is harmonized to the maximum level implemented by the European Union. The intention was to have limited scope through the directive, allowing for discretion and interpretation on a national and member state level.


On the 16 February 2017, the Malta Financial Service Authority (the “MFSA”) issued consultation documents with the financial services industry as well as drafted amendments and a legal notice, in preparation for the transposition of MiFID II and the MiFIR into Maltese legislation. The draft legal notices are still at an early stage and the MFSA will be taking into account comments and suggestions by the financial services industry in order to prepare for the transposition of MiFID II in the best way possible. Transposition into Maltese legislation will mainly be through the Investment Services Act, the Financial Markets Act, as well as the Malta Financial Services Authority Act and the Banking Act. The legal notice issued by the MFSA and the consultation document are currently the only main documentation which shed light on the implementation of MiFID II by the MFSA. The legal notice issued by the MFSA already indicates that there shall be co-operation between the MFSA and all other regulatory authorities in the European Union member states in order to enhance the protection of Maltese investors as well as other European investors.

The competent regulatory authorities will be granted the discretion to exercise supervisory powers over investment firms which fail to adhere to the requirements and obligations of the legislation in full.


MiFID II is to be fully implemented in the legal framework of all European Union member states (such as Malta) by the 3 January 2018.

What’s Next?

Upon finalization of review of the consultation process, the MFSA is expected to communicate its findings with the industry and to issue the final amended laws and rule books.
lecocqassociate will be issuing updates in this respect in order to ensure that affected parties are prepared and have implemented the relevant changes and processes to comply with MiFID II upon its coming into effect on the 3 January 2018.

Our Experience

lecocqassociate provides a full range of financial regulatory, corporate and commercial advice in relation to the structuring and incorporation of entities.
This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact us for any questions.

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