News & Views

Global Impacts of MiFID II (Part 1 of a 3-part blog)


Following recent trips to Hong Kong and Singapore, and the east and west coasts of the US, Liquidnet’s Head of Market Structure & Strategy in EMEA, Rebecca Healey, shares her insight about what she heard from asset managers across the globe and how MiFiD II impacts them.



As the impact of the EU’s upcoming MiFID II unfolds, the buy side outside of Europe is watching from afar, but with an interest just as intense. How will the regulation impact beyond European borders? How can a firm determine if it is in scope? What regulatory obligations will it need to make if this is the case?

The reality may not be as complex as some may believe from a regulatory perspective. Rather, there are now growing commercial requirements that are adding to the general confusion around MiFID II.

Are you in scope?

So, how can a non-European-based buy side firm determine if MiFID II is going to affect them or not? It really depends on what they are trading, and where.

An asset manager based outside of Europe is only obliged to comply with European regulations if they trade a European instrument on a European venue. If they are trading non-European instruments as a non-European investment entity, their only regulator is their local regulator, not ESMA.

LEIs: Can I see some ID?

And if a firm is deemed to be in scope, what does that actually mean?

If they trade into Europe, their obligations are dependent on whether they execute with a European broker or trade directly onto a European venue, which would include execution venues such as Systematic Internalisers, as well as trading venues. This may require trade and transaction reporting obligations depending on the nature of their interaction, in particular the need for a Legal Entity Identifier (LEI) code.

MiFID II will require all parties involved in all financial instrument transactions to include the entity’s LEI when reporting to the competent authority. This applies to:

  • Any issuance in Europe
  • Any investment firm that operates in Europe (and their clients)
  • Any participant of a European trading venue (and their clients)
  • Any broker who operates in Europe

With less than five months now to go, it is clear that there are a number of issues still to be addressed.

Liquidnet has developed the chart below so firms can easily cross-reference how they might be affected. Of couse, as with all elements of MiFID II, firms should take independent legal advice to verify individual circumstances.

How will MiFID II affect your firm?

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