MiFID II Will Affect Market Structure, Registration and Soft Dollars for Hedge Funds Trading in Europe

Broker-dealers, asset managers and investment advisers all are affected by the E.U. Markets in Financial Instruments Directive (MiFID), which includes rules regarding authorization, business conduct, governance, market activities and reporting. Clifford Chance recently presented a program on how pending revisions to MiFID (commonly referred to as “MiFID II”) may affect U.S. hedge fund and other asset managers. The program – featuring partner Nick O’Neill and associate Sarah James – focused on implementation logistics and timing; market structure; product development and soft dollar rules; the third-country equivalency regime; and other relevant E.U. developments. This article summarizes their key insights. For more on MiFID II, see “ESMA Releases Final Report on MiFID II Technical Standards for Hedge Fund Management Firms” (Jul. 16, 2015); and “MiFID II Expands MiFID I and Imposes Reporting Requirements on Asset Managers, Including Non-E.U. Asset Managers” (May 28, 2015). For additional insight from Clifford Chance partners, see “Hedge Fund Managers Trading Distressed Debt Must Understand LMA Standard Form Documentation” (Feb. 25, 2016); and our series, “How Can Hedge Fund Managers Use Reinsurance Businesses to Raise and Retain Assets and Achieve Uncorrelated Returns?”: Part One (Jan. 10, 2013); and Part Two (Jan. 17, 2013).

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