Capital Markets Recovery Package

**MIFID II Quick Fix**

Capital Markets Recovery Package

As part of the recovery strategy, the Commission published on 28 July 2020 a number of legislative proposals amending MiFID II, the prospectus regulation, the securitisation regulation, and the capital requirements regulation. Altogether, the ‘Capital Markets Recovery Package’ aims at further enhancing the role of securities markets to provide for a flexible environment in which the market can operate, even in stress conditions.

MIFID QUICK FIX
The Commission is proposing to recalibrate investor protection requirements to strike the right balance between a sufficient level of transparency for the client, the highest standard of protection, and acceptable compliance costs for firms. The overall goal is to allow the recapitalisation of European firms in the aftermath of the crisis by removing current burdens to investments that are not strictly necessary. The legislative proposal focuses on (1) changes to investor protection and (2) amendments to SME research and fixed income research. The proposed changes consist of relief of information requirements for professional clients and eligible counterparties, such as the phase out of paper-based communication and exemption from cost and charges information.

State of play of the negotiations

The Commission’s legislative proposal is now being debated in first reading by the co-legislators, with the aim to publish the markets recovery packages together in the Official Journal of the EU by end of December 2020. Overall, negotiations in both the Parliament and Council seem to be progressing at a good pace and a general approach to be adopted in December remains a possibility. The file is of high-priority for the German Presidency which has already adopted its negotiating mandate in COREPER and the Parliament will hold a final plenary vote on its position end of November. The trilogue negotiations are expected to start mid-November.

Share Trading Obligation

The rather politically complex question on how to deal with STO scope has considerably slowed down negotiations. After a month of heated debates, both the Council and the parliament voted not to include the clarification of the STO scope in their final position. However, we understand that a few MEPs are planning to keep this issue on the table in the coming weeks through other means. In addition, ESMA issued final guidance to clarify the application of the EU's STO in the event of a no-deal/no equivalence scenario and confirmed that the trading of shares with an EEA ISIN on a UK trading venue in GBP will not be subject to the EU's STO.