Coming Into Focus: European Swap Trading Under MiFID II

The Markets in Financial Instruments Directive and Regulation (MiFID II/MiFIR) is not expected to be fully adopted until January 2018, but the delay will not help market participants put off key strategic decisions. The best response for market participants is to prepare intelligently and understand the full scope of the changes that are coming. This TABB Group report examines the progress made within the European regulatory regimes in implementing the Markets in Financial Instruments Directive and Regulation (MiFID II/MiFIR) and some of the key factors participants in the US and European swaps market will need to consider as the market evolves.

Key Points

• Markets in Financial Instruments Directive and Regulation (MiFID II/MiFIR) is not expected to be fully adopted until January 2018.
• Buy side participants will need to grapple with new requirements to understand and accesses differences in cost and transparency of counterparty and venue options depending on each firms unique trading activity.
• New margin requirement for non-cleared swaps will come into effect September 1, 2016 will put new balance-sheet pressure on banks and underscore the need for participants to understand the differences between execution venues that will provide the primary path to clearing.
• The “bottom up” approach by European regulators has put the onus on the part of the dealers to decide how to define themselves within the new regulatory framework.