The European Securities and Markets Authority (ESMA) has published its Final Report proposing rules for the authorization of investment firms under the recast Markets in Financial Instruments Directive (MiFID II) and related regulations (MiFIR). The Final Report, dated June 29, 2015, covers draft technical standards on authorization, passporting, registration of third-country firms and cooperation between competent authorities. It analyzes responses to ESMA’s consultation paper released in December 2014; explains the resulting changes to the proposed technical standards; and includes the text of the final draft regulations as well as a cost-benefit analysis of the proposals. It is important for hedge fund managers and other investment firms to understand, and prepare for, the new rules because MiFID II will apply to firms with regulated offices in the E.U. and have indirect effects on all asset managers that trade on E.U. markets or that contract with E.U. counterparties. This article highlights the key issues arising from the consultation and the consequential modifications to the draft technical standards. For more on MiFID II, see “Simmons & Simmons and Advise Technologies Provide Comprehensive Overview of MiFID II (Part One of Two)
,” Hedge Fund Law Report, Vol. 8, No. 24 (Jun. 18, 2015); and Part Two of Two
, Vol. 8, No. 25 (Jun. 25, 2015). See also “MiFID II Expands MiFID I and Imposes Reporting Requirements on Asset Managers, Including Non-E.U. Asset Managers
,” Hedge Fund Law Report, Vol. 8, No. 21 (May 28, 2015); and “Changing Regulations May Restrict Hedge Fund Managers’ Use of Soft Dollars in Europe
,” Hedge Fund Law Report, Vol. 8, No. 24 (Jun. 18, 2015).