by Adrian Brown  Charlotte Collins King & Wood Mallesons London ,United Kingdom

brown_aMIFID II makes various adjustments to the exemptions under MIFID I, largely with the aim of tightening the regime and increasing investor protection.

Although two new exemptions have been added – for operators complying with the EU Emissions Trading Scheme Directive in certain circumstances, and for certain gas and electricity operators – these are consequent upon expansions to the scope of MIFID II rather than indicative of new concessions.

Most of the changes result in the narrowing of exemptions, particularly affecting firms that rely on the current exemptions for commodities firms and the dealing on own account exemption. Further, the exemption for “locals” (those who exclusively deal on own account on derivatives and cash markets for hedging purposes, or who deal for accounts of other market members or make prices for them, where performance is guaranteed by clearing members) has been deleted – although locals should still be able to benefit from an exemption in the Capital Requirements Regulation to avoid facing a dramatic shift in capital requirements.

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