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MiFID v EMIR: Difference between revisions
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{{a|regulation|}}The two major pieces of regulation covering the European investment banking and trading worlds are MiFID — the [[MiFID|Markets in Financial Instruments Directive]] and [[EMIR]] — the [[European Market Infrastructure Regulation]]. | {{a|regulation|}}The two major pieces of regulation covering the European investment banking and trading worlds are MiFID — the [[MiFID|Markets in Financial Instruments Directive]] and [[EMIR]] — the [[European Market Infrastructure Regulation]]. | ||
It is easy to | It is easy to get them confused, as they somehow impact on a lot of the same material: securities, transactions, swaps, stuff like that. The best way of thinking about them is that MiFID is regulates financial services, and the people who offer them to the public, to make sure they are behaving themselves and not taking advantage of the poor misguided souls who buy and sell financial services and products, while EMIR is designed to regulate and protect the financial system itself and therefore is focussed on setting standards and ensuring safety rails are in place to avoid the concentration of market risk in the system. | ||
MiFID came into force in 2007, and was conceived and enacted well before the [[global financial crisis]], as part of the EU’s general development and harmonisation of its internal market. EMIR was a direct response to the financial crisis. | MiFID came into force in 2007, and was conceived and enacted well before the [[global financial crisis]], as part of the EU’s general development and harmonisation of its internal market. EMIR was a direct response to the financial crisis. | ||
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*'''Clearing''': When they have to clear transactions across a central counterparty. | *'''Clearing''': When they have to clear transactions across a central counterparty. | ||
*'''Margin''': When they have to post regulatory variation and initial margin. | *'''Margin''': When they have to post regulatory variation and initial margin. | ||
*'''Reporting''': | *'''Reporting''': What they have to report about their trades to trade repositories | ||
|| Regulates how financial services businesses provide investment services and activities to customers <br> | || Regulates how financial services businesses provide investment services and activities to customers <br> | ||
*'''Regulated activities''': The [[Investment services and activities]] set out in Annex I section A of MiFID. | *'''Regulated activities''': The [[Investment services and activities]] set out in Annex I section A of MiFID. | ||
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*'''Transaction reporting''': Don’t ask me why, but ''transaction reporting'' to National competent authorities is handled by MiFID. | *'''Transaction reporting''': Don’t ask me why, but ''transaction reporting'' to National competent authorities is handled by MiFID. | ||
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more on the differences between trade reporting and transaction reporting: | |||
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|+ Difference between Trade Reporting and Transaction Reporting | |||
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! Aspect !! EMIR Trade Reporting !! MIFID Transaction Reporting | |||
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| Scope || Primarily for OTC derivatives markets that are regulated under EMIR || Applies to a wider range of financial instruments, including securities and bonds that are regulated under MiFID | |||
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| Purpose || Enhance transparency, monitor systemic risk, enable oversight || Designed to ensure MiFID-regulated providers of financial services are behaving themselves. Therefore may detect [[market abuse]] (whether by the [[dealer]] or the customer — because dealers are meant to be monitoring their customers’ activity aren’t abusing the market, ensure market integrity, enhancing investor protection | |||
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| Information Reported || Details of executed trades, parties involved, derivative type, notional value, price, date, time || Details of transactions, instrument traded, quantity, price, counterparties, date, time | |||
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| Regulatory Application || Under regulations like EMIR || Under regulations like MiFID | |||
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While there are similarities in the types of information reported under EMIR and MiFID they have different focuses (foci?) and scope. EMIR’s reporting requirements are tailored to derivatives, while MiFID’s requirements cover a broader range of instruments and activities. | |||