Norway implements the MIFID II reform by national decrees with effect 3 January 2018. This surprisingly soon implementation will force Norwegian investment firms to finish what are left of preparations in just 30 days, writes Ole Einar Stokstad, Head of Credit Research at DNB Markets
The government of Norway, which is part of the European Economic Area (EEA), surprisingly issued two national decrees on 4 December saying it will implement the same rules as the EU’s MIFID II (Markets In Financial Instruments Directive) and MIFIR (Markets In Financial Instruments Regulation), respectively. The directive and the regulation, a reform together dubbed MIFID II, are set to take effect from 3 January 2018 in the EU.
For EEA members outside of the EU, including Norway, the legal implementation has been stalled by lack of capacity to introduce the changes into the EEA agreement, allegedly partly because of the ongoing Brexit negotiations.
The two decrees were issued by the Norwegian Financial Supervisory Authority (Finanstilsynet), as delegated by the Norwegian Ministry of Finance (Finansdepartementet).
The two decrees cover the same rules as MIFID II/ MIFIR, according to the press release from Finanstilsynet. The fact that the two decrees are shorter in terms of pages than the original texts, and the referring to existing national law, indicate that these texts are not exact translations, however.
The regulation decree refers to the related technical standards (proposed by ESMA and passed by the EU commission), and ESMA’s right to decide new regulatory technical standards. Also, supervision by ESMA is covered.
It appears that all the relevant areas of the MIFID II reform are covered, including but not limited to:
Market structure including Investment firms, Trading venues/facilities, Systematic Internalisers (SI).
Pre and post trade transparency.
Transaction reporting and record-keeping.
Investor protection including best execution, inducement rules and client reporting (cost and charges).
It is fortunate that Norwegian investment firms will have a level playing field with EU investment firms, given that ESMA will accept the legal statuses of EEA investment firms registering for SI and other roles.
DNB Markets is already set to be MIFID II-ready by 3 January, due to an international client base.
For smaller Norwegian investment firms, now perhaps caught off guard due to the previous signals of postponed introduction, there will be a rush to get ready in 30 days. Hopefully, for smaller investment firms, some leeway or period of grace will be granted.