A new research report from Finadium analyzes MiFID and MiFIR specifically for their impacts on securities finance businesses. These regulations have sizeable impacts on on financing both in their direct references and in electing to provide no exemptions.
The revised MiFID II and MiFIR regulations build on their predecessor MiFID, which addressed qualifications and rules of conduct for investment firms operating in the European Union (EU); admission standards for participants in regulated markets; trade reporting and transparency; and standards for the issuing of market instruments to regulated exchanges. MiFID II and MiFIR go many steps further and have been heavily influenced by concerns over the resiliency of markets. Regulators are also working to better understand and manage systemic risks within their spheres of responsibility.
Securities finance is caught up in this net of regulation. While financing has few direct references in MiFID II and MiFIR, the indirect references are far, wide, and much more important. These regulations are focused on business conduct at investment firms. As these Acts capture a broad range of activity, securities finance market participants may well find that they need to rethink some parts of their business models entirely.
This Finadium report presents a summary and analysis for securities finance market participants looking to understand the business implications of MiFID II and MiFIR. We look at direct and indirect impacts and analyze potential pitfalls as firms work to comply with the new rules. This report should be read by any bank, broker, asset manager, pension or hedge fund engaged in securities lending, repo or collateralized trading activity.
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