The recast Markets in Financial Instruments Directive (MiFID II) will significantly alter the environment in which hedge fund managers operate in Europe: it will bring in new conduct requirements for hedge fund managers; introduce new transparency and trade reporting regimes; set limits in relation to the dark trading of equities and commodities derivatives trading; bring in new regulations for high frequency trading; and require certain new authorizations. David Lawton, the Director of Markets Policy and International at the U.K. Financial Conduct Authority (FCA), delivered a speech entitled “MiFID II – The Road Ahead” at the FCA’s recent MiFID II Conference in London. Noting that MiFID II legislation “has huge impact on the industry,” Lawton identified the topic as a “major priority” for the FCA. It is essential that all hedge fund managers trading in Europe fully understand the changes that will be brought about by the new MiFID II regime and keep abreast of the implementation timetable. Accordingly, his speech provided hedge fund managers a glimpse into the FCA’s current vision with respect to MiFID II rule-making and implementation, which Lawton noted should be “useful for planning purposes,” although the rules and timelines discussed will remain a moving target. Further, the speech shed light for hedge fund managers on how the FCA intends to engage with the industry and elucidated two particularly contentious topics – bond market liquidity and commodity derivatives. This article summarizes the speech, outlining the FCA’s timelines and engagement strategy and highlighting the key messages for hedge fund managers. For more on MiFID II, see “ESMA Releases Final Report on MiFID II Technical Standards for Hedge Fund Management Firms
,” Hedge Fund Law Report, Vol. 8, No. 28 (Jul. 16, 2015); “Simmons & Simmons and Advise Technologies Provide Comprehensive Overview of MiFID II (Part Two of Two)
,” Hedge Fund Law Report, Vol. 8, No. 25 (Jun. 25, 2015); and “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).