10 يوليو 2023 Financial Regulation

Linklaters MIFIR study reveals the extent of divergence since Brexit

A landmark piece of legislation, the Financial Services and Markets Act (FSMA 2023), has just been enacted. As part of this, one of the cornerstone pieces of financial regulation has been amended: the UK’s Markets in Financial Instruments Regulation (MIFIR).

Using Linklaters Law Compare, the firm’s Financial Regulation team has evaluated the upcoming changes made by the Act in context. It amends 29 articles of UK MiFIR. These include replacing the pre-trade transparency waiver regime, which can impair liquidity, and removing the double volume cap, which limits so-called dark trading.

The team has also been tracking all the changes that have been made to UK MiFIR since Brexit. Taking into account the upcoming FSMA 2023 amendments, it found:

  • Only one provision of UK MiFIR is unchanged since Brexit – and even that should be interpreted differently because of changes to defined terms
  • UK MiFIR includes 57 new or revised definitions which, for example, reduce the territorial scope of the regime in some key areas and rework the key definition of “systematic internaliser”
  • 33 articles of UK MiFIR continue to refer to pre-Brexit Q&A guidance from the European Securities and Markets Authority

The EU regime has not been standing still in this time. For example, 24 articles have been added to the EU version of MiFIR since Brexit. Elsewhere in the Markets in Financial Instruments Directive (MiFID) framework, ESG rule changes started to apply in the EU last year which aim to integrate sustainability risks and sustainability factors into firms’ decision-making. And there is more to come. The EU is currently exploring several important changes to its regime as part of its MiFID Review.

Peter Bevan, Global Practice Head of Linklaters’ Financial Regulation Group, commented:

“The UK Government will shortly start using its powers under FSMA 2023 to deliver on government proposals to devolve vast powers to the regulators now that they have been returned from the EU. While this process could take many years, there are changes to important aspects of financial regulation in the shorter term which have the potential to contribute significantly to the UK’s goal of being a dynamic and competitive financial services hub.”

Linklaters Law Compare has been designed to help financial services firms navigate EU-UK divergence in real time, providing you with a comprehensive view of both regimes and the ability to compare corresponding rules. Developed with Single Rulebook, the tool provides full coverage of the EU and UK MiFID regimes from high-level requirements, through technical standards, to guidance and Q&A, as well as additional commentary from Linklaters’ subject matter experts.