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The second Markets in Financial Instruments Directive (MiFID II) mandated the unbundling of payments for research and trading. This research explores whether the impact of MiFID II differs between large and small firms in terms of analyst coverage and stock liquidity. Focusing on the UK stock markets we find a significant drop in analyst coverage on the Main Market, which leads to a deterioration in market liquidity. In contrast, the requirement of AIM firms to retain a Nominated Adviser, who often provides research coverage, has mitigated the impact of MiFID II. [ABSTRACT FROM AUTHOR]

L’integrazione dei requisiti sostenibilità nella normativa di derivazione MiFID II, segnatamente nell’ambito delle regole organizzative e di condotta delle imprese che prestano i servizi di consulenza e di gestione di portafogli, genera una serie di interrogativi e problemi interpretativi e applicativi da cui può scaturire un conflitto tra due ugualmente validi obiettivi regolatori: quello della tutela del cliente, proprio della normativa ex MiFID II, e quello della sostenibilità a cui è finalizzato l’intervento integrativo della Commissione Europea. Il presente contributo ha lo scopo di esaminare se i rinnovati Orientamenti dell’ESMA su alcuni aspetti dei requisiti di adeguatezza della MiFID II del 3 aprile 2023 siano in grado di chiarire ed interpretare alcuni profili ‘azzardati’ della nuova disciplina onde bilanciare adeguatamente i suddetti obiettivi regolatori, impedendo che la sostenibilità diventi uno strumento nelle mani degli intermediari suscettibile di utilizzo a danno gli investitori in strumenti finanziari. / 𝑇ℎ𝑒 𝑖𝑛𝑡𝑒𝑔𝑟𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑠𝑢𝑠𝑡𝑎𝑖𝑛𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡𝑠 𝑖𝑛 𝑀𝑖𝐹𝐼𝐷 𝐼𝐼 𝑝𝑎𝑐𝑘𝑎𝑔𝑒-𝑏𝑎𝑠𝑒𝑑 𝑜𝑟𝑔𝑎𝑛𝑖𝑠𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑎𝑛𝑑 𝑐𝑜𝑛𝑑𝑢𝑐𝑡-𝑜𝑓-𝑏𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑟𝑒𝑔𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑜𝑟 𝑎𝑑𝑣𝑖𝑠𝑒𝑟𝑠 𝑎𝑛𝑑 𝑝𝑜𝑟𝑡𝑓𝑜𝑙𝑖𝑜 𝑚𝑎𝑛𝑎𝑔𝑒𝑟𝑠 𝑙𝑒𝑎𝑑𝑠 𝑡𝑜 𝑚𝑎𝑛𝑦 𝑞𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑠 𝑎𝑛𝑑 𝑝𝑟𝑜𝑏𝑙𝑒𝑚𝑠 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑝𝑟𝑒𝑡𝑎𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝑎𝑝𝑝𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛. 𝑇ℎ𝑖𝑠 𝑠𝑖𝑡𝑢𝑎𝑡𝑖𝑜𝑛 𝑐𝑜𝑢𝑙𝑑 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒 𝑎 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑐𝑜𝑛𝑓𝑙𝑖𝑐𝑡 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑡ℎ𝑒 𝑡𝑤𝑜 𝑤𝑜𝑟𝑡ℎ𝑤ℎ𝑖𝑙𝑒 𝑟𝑒𝑔𝑢𝑙𝑎𝑡𝑜𝑟𝑦 𝑜𝑏𝑗𝑒𝑐𝑡𝑖𝑣𝑒𝑠: 𝑖𝑛𝑣𝑒𝑠𝑡𝑜𝑟 𝑝𝑟𝑜𝑡𝑒𝑐𝑡𝑖𝑜𝑛, 𝑝𝑢𝑟𝑠𝑢𝑒𝑑 𝑏𝑦 𝑀𝑖𝐹𝐼𝐷 𝐼𝐼, 𝑎𝑛𝑑 𝑒𝑛𝑠𝑢𝑟𝑖𝑛𝑔 𝑠𝑢𝑠𝑡𝑎𝑖𝑛𝑎𝑏𝑖𝑙𝑖𝑡𝑦, 𝑝𝑢𝑟𝑠𝑢𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝐸𝑢𝑟𝑜𝑝𝑒𝑎𝑛 𝐶𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑟𝑒𝑔𝑢𝑙𝑎𝑡𝑜𝑟𝑦 𝑎𝑚𝑒𝑛𝑑𝑚𝑒𝑛𝑡𝑠. 𝑇ℎ𝑒 𝑝𝑢𝑟𝑝𝑜𝑠𝑒 𝑜𝑓 𝑒𝑠𝑠𝑎𝑦 𝑖𝑠 𝑡𝑜 𝑎𝑛𝑎𝑙𝑦𝑠𝑒 𝑤ℎ𝑒𝑡ℎ𝑒𝑟 𝑡ℎ𝑒 𝑟𝑒𝑛𝑒𝑤𝑒𝑑 𝐸𝑆𝑀𝐴 𝐺𝑢𝑖𝑑𝑒𝑙𝑖𝑛𝑒𝑠 𝑜𝑛 𝑐𝑒𝑟𝑡𝑎𝑖𝑛 𝑎𝑠𝑝𝑒𝑐𝑡𝑠 𝑜𝑓 𝑀𝑖𝐹𝐼𝐷 𝐼𝐼 𝑠𝑢𝑖𝑡𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡𝑠 𝑜𝑓 3 𝐴𝑝𝑟𝑖𝑙 2023 𝑎𝑟𝑒 𝑎𝑏𝑙𝑒 𝑡𝑜 𝑐𝑙𝑎𝑟𝑖𝑓𝑦 𝑎𝑛𝑑 𝑖𝑛𝑡𝑒𝑟𝑝𝑟𝑒𝑡 𝑠𝑜𝑚𝑒 '𝑟𝑖𝑠𝑘𝑦' 𝑝𝑟𝑜𝑓𝑖𝑙𝑒𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑛𝑒𝑤 𝑓𝑟𝑎𝑚𝑒𝑤𝑜𝑟𝑘 𝑖𝑛 𝑜𝑟𝑑𝑒𝑟 𝑡𝑜 𝑎𝑑𝑒𝑞𝑢𝑎𝑡𝑒𝑙𝑦 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑡ℎ𝑒 𝑎𝑓𝑜𝑟𝑒𝑚𝑒𝑛𝑡𝑖𝑜𝑛𝑒𝑑 𝑟𝑒𝑔𝑢𝑙𝑎𝑡𝑜𝑟𝑦 𝑜𝑏𝑗𝑒𝑐𝑡𝑖𝑣𝑒𝑠, 𝑏𝑦 𝑝𝑟𝑒𝑣𝑒𝑛𝑡𝑖𝑛𝑔 𝑠𝑢𝑠𝑡𝑎𝑖𝑛𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑓𝑟𝑜𝑚 𝑏𝑒𝑐𝑜𝑚𝑖𝑛𝑔 𝑎 𝑡𝑜𝑜𝑙 𝑖𝑛 𝑡ℎ𝑒 ℎ𝑎𝑛𝑑𝑠 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑚𝑒𝑑𝑖𝑎𝑟𝑖𝑒𝑠 𝑡ℎ𝑎𝑡 𝑖𝑠 𝑙𝑖𝑘𝑒𝑙𝑦 𝑡𝑜 𝑏𝑒 𝑢𝑠𝑒𝑑 𝑡𝑜 𝑑𝑎𝑚𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑜𝑟𝑠 𝑖𝑛 𝑓𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡𝑠.

In this article we discuss how an investment firm established outside the EU may provide services (to clients) in the EU. We explore how such third country firms may enter the European market and discuss the current state of the third country regimes as provided (partly) under EU law, their use—or notable lack thereof—and the challenges involved in the supervision of third country firms. We note that the recent updates to the third country equivalence regime for the provision of services to professional clients render the use of this regime even more difficult. In respect of the (optional) third country regime for the provision of services to retail clients, we observe that this regime is much akin to a full license requirement, albeit with notable difficulties when it comes to supervision and enforcement. Altogether, we come to the unfortunate conclusion that the EU third country regime for investment firms established in third countries can barely be called successful. [ABSTRACT FROM AUTHOR]

The Markets in Crypto-assets Regulation (MiCA) seeks to regulate crypto-asset services and cryptoasset service providers within the European Union as an area, which was mainly built on the idea of independence from the current "traditional" financial system and its regulatory framework. MiCA, inspired by the Markets in Financial Instruments Directive (MiFID II) as a cornerstone of the EU financial services regulation, now aims to change the paradigm. The paper focuses on examining the scope of the relevant crypto-asset services compared with the investment services catalogue under MiFID II. By analysing the definitions and content of individual services, it seeks to identify possible differences and frictions. Further, it categorises and evaluates prospective requirements put on the crypto-asset service providers (CASPs). As a result, the paper emphasizes the relevant differences of MiCA and MiFID II lists, as well as provides an overview of the new requirements put on cryptoasset service providers. [ABSTRACT FROM AUTHOR]

Scholars and policy makers have long debated whether securities firms should be allowed to bundle the cost of execution services with the cost of research. Investor advocates condemn the practice whereas industry representatives defend it. In 2018, as part of the Markets in Financial Instruments Directive II (MiFID II) legislative regime, the EU forced the unbundling of commission charges, diverging from US legal standards which still allow 'soft dollar' payments for research. The EU's unbundling regime has challenged global financial services firms, which must now comply with conflicting rules across national boundaries. For more than five years, the US Securities and Exchange Commission provided temporary no-action relief to facilitate compliance with MiFID II, but that relief expired in July 2023, presenting an opportunity to reconsider the impact of MiFID II's unbundling regime and its implications for US regulators and investors. While this article takes a critical view of soft dollar practices, the story of MiFID II presents contested issues of policy analysis as the agency costs inherent in bundled commissions could be offset by the public benefits of additional research. Unbundling also offers a noteworthy example of an innovation in capital markets regulation flowing from Europe to the United States rather than the other way around. [ABSTRACT FROM AUTHOR]

Following the financial crisis of the last decade and the increasing complexity of financial products, the European Union has introduced investor protection tools that require professionals to carry out a client profiling process. The aim is to offer products that are in line with the characteristics of the individual. The classes of variables for comprehensive profiling are obtained by matching the elements proposed by the Markets in Financial Instruments Directive and studies of classical finance. However, behavioural finance studies, which emphasise the importance of behavioural attitudes, are not clearly considered in this structured profiling. The present paper discusses the implementation of an analytic network process to support financial decision-making in a behavioural context, combining regulatory guidance and qualitative and quantitative evidence from the literature. The Kersey Temperament Model is used as the behavioural model to construct the network cluster that incorporates personality into the valuation. Uncertainty management is incorporated through recent studies in the context of intertemporal choice theory. The functionality of the network is verified through a case study, where two alternatives with different characteristics are considered to meet the same investment objective. The present approach proves how the generated structure can provide strong support for financial decision-making. [ABSTRACT FROM AUTHOR]

One of the main elements of the MiFIR Review is the revision of the framework for a Consolidated Tape in Europe. The objective is to establish a tape for each of the three main asset classes: bonds, equity, and derivatives. The objective is to provide a single reference source of information for transactions. It would thus reduce fragmentation and information asymmetries within the Capital Markets Union. This paper examines the main elements of the proposals, tailored to each asset class, as well as different use cases. Overall, the proposals appear to be a significant improvement on the current unsuccessful framework. [ABSTRACT FROM AUTHOR]

This article identifies barriers to the complete implementation of the organized trading facility (OTF) as a new category of trading venue under the Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II). It argues that attempts to reconcile the competing claims of incumbent regulated markets and dealer banks operating broker crossing networks in the cash securities markets led to a market design that is not suitable for the over-the-counter (OTC) derivatives markets. The result has been that multilateral trading in the wholesale secondary markets has not been incorporated in trading venues, as was intended, and that changes that are better aligned to market requirements are needed. These include reform of requirements transposed from the cash securities markets, such as standardized fee structures, and relaxation of restrictions on interactions between an OTF and other OTFs or systematic internalizers. [ABSTRACT FROM AUTHOR]

Copyright of Maandblad voor Vermogensrecht is the property of Boom uitgevers Den Haag and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study investigates the impact of MiFID II on the London Stock Exchange. We find that a tick‐size reduction leads to lower bid–ask spreads, lower trade values, reduced cost of trading at and beyond the best bid‐offer, an acceleration of quote updates, an increase in aggressive trades and a reduction in price impact. Increased tick size widens spreads and increases trading costs. Step functions reveal that liquidity adjusts opposite to the tick change. To determine if impacts are proportional, we identify potential functions that predict cost changes with tick updates, implying that traders adjust their trade sizes according to the new tick levels. [ABSTRACT FROM AUTHOR]

In line with international policy initiatives after the 2008 financial crisis, the EU co-legislators have sought to mitigate the potential destructive effects of derivative contracts through a host of far-reaching legislative interventions (e.g. mandatory usage of central counterparties (CCPs)). To determine the scope of application of these legislative initiatives, the definition of derivatives is of pivotal importance. Although a strand in legal scholarship has aimed to map the conceptual properties of derivatives, the derivatives definitions that have been conceived by the EU co-legislators to demarcate the scope of recent legislative interventions have received virtually no attention. This article seeks to fill this gap. Through a combination of conceptual and regulatory analysis, the article develops two new arguments. First, it argues that derivatives definitions in EU law do not identify any distinctive conceptual properties of derivatives and, instead, only provide a circular description of what derivatives may be. Secondly, it submits that this conceptually unsatisfactory approach is symptomatic for a more fundamental deficit in the conceptual underpinnings of derivatives. By exploring the relation between the derivatives definitions in EU law and the conceptual properties of derivatives, this article seeks to uncover some of the conceptual impurities in the premises on which the major overhaul of EU derivatives legislation has been built. [ABSTRACT FROM AUTHOR]

Copyright of Revista Română de Drept al Afacerilor is the property of Wolters Kluwer Romania and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Studies & Work of the Collegium of Management & Finance / Studia i Prace Kolegium Zarzadzania i Finansów is the property of SGH Warsaw School of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In the last years, technological progress and financial innovation have promoted the development of investment activities based on the use of trading algorithms, enabling cost reduction along with a more efficient management of trading activities. Since the early 2000s this process has grown reaching peaks of 70% of total orders in some markets. Technological development is pushing all the financial algorithmic players to improve data management and processing in step with increasing trading speeds. Accordingly, the algorithmic trading activity growth has affected and will affect the integrity and quality of the market (price information efficiency, volatility and liquidity), sharpening the systemic impact of any shocks. In order to mitigate these potential negative effects, the European and American Supervisory Authorities have started a serious consideration, adopting ad hoc regulations to manage the risks faced by intermediaries who use algorithms and other operators in the financial markets. In particular, the European Regulator, within the MIFID II framework, defined principles and guidelines of the self-assessment and validation process that intermediaries have to perform annually in order issue a validation report to the Competent Authority. The purpose of this article is to provide an overview of the current and prospective algorithmic trading business, with the aim of representing on one hand the evolution of the framework adopted by investment firms and on the other hand to provide guidelines for the drawing up of the validation report on the algorithmic trading systems and trading algorithms, according to EU legislation [1][2][3][4][5][6] and national legislation [7][8]. The evolution of the framework adopted by intermediaries has experienced the integration of compliance, risk-oriented and business logics in order to take the best out of the opportunity given by the legislation to reengineer and validate processes. Further details about this article are shown in the Position Paper [9] prepared within the AIFIRM – ASSIOM FOREX Working Group on algorithmic trading, which is made up of Risk Managers and Traders of the largest national intermediaries, currently working in algorithmic trading, and suitably assisted by the other involved organizational structures.

MIFID II/MiFIR represents comprehensive financial market reforms in trading and settlement of financial instruments. The greatest impact of the new regulatory framework in the banking sector relates to pricing, trading, and reporting of banking products and classification of financial institutions. The new role of the financial market infrastructure provides more protection for bank customers and significantly increases market transparency. Banks are required to show their customers the best execution price on the relevant trading venues, transaction costs and market behavior. The regulation will be aligned with other financial market regulations of over-the-counter markets and market abuse protection to avoid regulatory overlap - European Market Infrastructure Regulation (EMIR). The new regulatory framework requires the banking sector to fully comply with the rules governing the banking system of the European Union. Banks must incur significant costs in order to restructure internal processes, acquire new technological support, and forego additional profits in competitive and transparent markets. This study analyses the impact of MiFID II/MiFIR and EMIR implementation on local banks' performance (credit institutions, Romanian legal persons). Using a unique dataset from banks that have been operating in Romania over the period 2004-2020, it is shown that the implementation of the new regulatory framework did not affect the net trading income ratio of the selected banks. Moreover, the average trading asset ratio in the post-financial crisis period increased in comparison with the average trading asset ratio in the pre-financial crisis period. Local banks that took advantage of the large economies of scale obtained due to branch banking did not reduce their investment banking activities and product offerings to customers in the period following the introduction of the regulatory framework. Most of the costs of implementing the new regulatory framework were borne only by the ultimate parents of the controlled Romanian subsidiaries. All subsidiary banks benefited equally from these economies of scale. [ABSTRACT FROM AUTHOR]

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Niniejszy artykuł prezentuje problematykę obowiązku uczestnictwa agenta emisji w procesie emisji obligacji, listów zastawnych i certyfikatów inwestycyjnych emitowanych przez niepubliczny fundusz inwestycyjny zamknięty. Jest to novum wprowadzone do polskiego prawa rynku kapitałowego na mocy ustawy z dnia 9 listopada 2018 r. o zmianie niektórych ustaw w związku ze wzmocnieniem nadzoru nad rynkiem finansowych oraz ochrony inwestorów na tym rynku (dalej: Ustawa) bezpośrednio oddziałujące na kształt podstawowych instytucji ustawy z dnia 15 stycznia 2015 r. o obligacjach (dalej: uo).

Wprowadzenie regulacji MiFID II wymagało implementacji tej dyrektywy do krajowego porządku prawnego z uwzględnieniem pewnej odrębności regulacji krajowych. Niestety do implementacji nie doszło przed wejściem w życie dyrektywy. Brak implementacji spowodował po stronie przedsiębiorstw energetycznych biorących udział w hurtowym obrocie towarowym wystąpienie ryzyka regulacyjnego związanego z brakiem pewności co do ostatecznego kształtu implementacji. Czas vacatio legis dyrektywy zamiast wykorzystania go na dostosowywanie struktury przedsiębiorstw energetycznych upłynął na oczekiwaniu na pojawienie się przepisów transponujących. W konsekwencji przedsiębiorstwa energetyczne otrzymały niezwykle mało czasu na dostosowanie swoich struktur do nowych wymogów regulacyjnych. Równocześnie zobligowane były do prowadzenia swojej działalności w oparciu o niezmienione przepisy ustawy o obrocie instrumentami finansowymi, przy pełnej świadomości nieuchronności wprowadzenia istotnych zmian, w tym nałożenia obowiązków reglamentacyjnych, z krótkim terminem ich wejścia w życie. Wszystko powyższe spowodowało, iż świadome zagrożeń przedsiębiorstwa energetyczne do czas pełnego ukształtowania się ładu post-Mifi dowego i praktyki działania, a zwłaszcza podejścia regulatora do nowych wymogów, podjęły szereg działań w celu przygotowania się do stosowania nowej regulacji.

The development of international markets, changing customer behaviors has led to the creation of new financial products, such as Bancassurance. Bancassurance is an insurance distribution channel through banks. Bancassurance is the main distribution channel for life insurance, the distribution of non-life insurance is less developed (e.g. France, Italy, Spain, Austria), and in Portugal the share goes up to over 80%. The financial crisis has highlighted deficiencies in the functioning and transparency of financial markets. The evolution of financial markets has led to the need to strengthen the regulatory framework for financial instruments markets, in order to increase transparency, investor protection, confidence, addressing unregulated areas, and to give the supervisory authorities adequate powers to carry out their tasks. This article proposes to present a classification of European regulatory measures for the implementation of Bancassurance.

Copyright of Revista Română de Drept al Afacerilor is the property of Wolters Kluwer Romania and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The aim of the study was to investigate whether investment advisors’ procedures of servicing evolve to meet MiFID II Directive requirements. Using a mystery client procedure adopted from the Synovate (2011) research, 51 datasets and 58 datasets were collected in 2016 and 2017. No statistical differences between annual results were found in procedures of collecting necessary information. Advisors were generally perceived to be clear in providing recommendations. Almost all clients were satisfied with such service. The results provide a general profile of a satisfied client as a person looking for transparent and clear information on investment alternatives provided by a professional in terms of collecting detailed but only necessary data. JEL: G24, G18, G11 null The creation of the English-language version of these publications is fi nanced in the framework of contract No. 607/P-DUN/2018 by the Ministry of Science and Higher Education committed to activities aimed at the promotion of education.

This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more in-house research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls, compared to the control group. We find some evidence that stock-market liquidity decreases post MiFID II. [ABSTRACT FROM AUTHOR]

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Purpose: The purpose of this paper is to assess the impact of the markets in financial instruments directive II (MiFID II) on investment services in the Baltic states. Design/methodology/approach: The authors take an exploratory, qualitative approach, based on data conducted from interviews with nine investment industry professionals using the laddering technique. The pool of experts was selected using the purposeful sampling method, and experts must have had a minimum of five years investment experience in the Baltics, working familiarity with MiFID II, and a university education in the fields of finance or economics. Findings: The strict requirements of MiFID II reduce the range of available investment products and services for customers in the Baltics. Also, the profitability of Baltic investment companies decreased due to high compliance costs and bans on inducements. The results indicate that this may lead to increased barriers to entry and mergers and acquisitions for small investment companies. Originality/value: To the best of the authors' knowledge, this is the first attempt to research the implications of MiFID II implementation in the Baltic states. The qualitative approach chosen offers a unique opportunity to highlight the critical effects of MiFID II on financial intermediates in smaller geographical markets. [ABSTRACT FROM AUTHOR]

In light of previous literature that has investigated the effects of MiFID and MiFID II regulation on stock market liquidity, we investigate whether the introduction of MiFID II in Romania has had any effect on the stock market liquidity. Through our empirical analysis, we were able to estimate a meaningful reduction of liquidity in the Romanian stock market liquidity, in response to MiFID II, in line with the previous empirical literature. We find that the liquidity of the BET index constituents has decreased in the period following MiFID II. We find contradictory results in what concerns the German stock market, which could be explained by the different level of development of the stock markets and of the financial education of investors.

The paper investigates whether the implementation of MiFID II, a packet of financial legislation applying broadly to European Union financial markets, has led to a change in the volatility of some European developed and emerging stock markets. We show that for the developed capital markets considered in the analysis, MiFID II did not lead to a decrease in the volatility of capital markets. On the contrary, for all analysis intervals considered (3 months, 6 months, 12 months, 18 months and 24 months), the impact on volatility is positive, with volatility increasing in the case of the FTSE 100, CAC40 and DAX stock indexes. There is a similar significant relationship for the Czech stock market, but only over the three-month interval. For the Polish and Romanian stock markets, which enforced MiFID II later, a negative impact of MiFID II on volatility could also be observed. In the Romanian market, MiFID II had a negative impact on volatility on the short-term horizon, while for the Polish market, the impact of MiFID II on volatility is noticeable on a longer term of 24 months.

The new MiFID II regulation put in place in January 2018 has deeply modified the microstructure of European financial markets. In particular, new tick size tables have been created, leading to tick size modifications for hundreds of assets. In this work, we investigate the relevance of this new tick size regime for the assets traded on Euronext. To do so, we analyze the changes of transaction costs paid by investors under this new regulation. We find that from this viewpoint, MiFID II clearly induced an improvement of market quality. [ABSTRACT FROM AUTHOR]

Given recent requirements for ensuring the robustness of algorithmic trading strategies laid out in the Markets in Financial Instruments Directive II, this paper proposes a novel agent-based simulation for exploring algorithmic trading strategies. Five different types of agents are present in the market. The statistical properties of the simulated market are compared with equity market depth data from the Chi-X exchange and found to be significantly similar. The model is able to reproduce a number of stylised market properties including: clustered volatility, autocorrelation of returns, long memory in order flow, concave price impact and the presence of extreme price events. The results are found to be insensitive to reasonable parameter variations. [ABSTRACT FROM AUTHOR]