EU Markets Brace for Change

ESMA releases MiFID II rules in 800-plus page document.

Europe’s capital markets are getting a new foundation.

The 28-nation European Union’s top markets regulator yesterday made public more than 800 pages of proposed rules that cover everything from high-frequency trading curbs to transparency requirements for bond markets and position limits for commodity derivatives, with the aim of boosting confidence in the financial system.

releaThe publication marks “an important step in the biggest overhaul of financial markets regulation in the EU for a decade,” Steven Maijoor, chairman of the Paris-based European Securities and Markets Authority (ESMA), said in an e-mailed statement.

The EU’s bid to revamp its market legislation, known as the Markets in Financial Instruments Directive, or MiFID, is the centerpiece of its work to implement agreements reached by the Group of 20 nations in the wake of the turmoil that followed the 2008 collapse of Lehman Brothers Holdings Inc. Members of the European Parliament and national governments reached a deal on the plans in January.

The accord ended more than two years of haggling over proposals from Michel Barnier, the EU’s financial-services chief. It’s now ESMA’s responsibility to define terms and flesh out detailed rules for national authorities to implement.

Barnier has said that other elements of the plans curb activities of commodity derivative speculators and set out “one of the strictest set of regulations for high-frequency trading in the world.”

The legislation is set to take effect in 2016, with longer timeframes for some measures.

ESMA gave traders, banks, and exchanges an Aug. 1 deadline to respond to the package, known as MiFID II.

“We appreciate the magnitude of this exercise for stakeholders,” Maijoor said. “We strongly encourage all those affected by these reforms to provide their views to ensure that we take them into account in our final proposals.”

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