ERDEM-NEWSLETTER-2018-metin

196 NEWSLETTER 2018 MiFID II and Its Eventual Impacts on Turkey* Att. Cansu Ozsan The financial crisis of 2007–2008, which is considered by many economists to have been the worst since the Great Depression of the 1930s, has exposed weaknesses in the transparency of the financial markets. In order to restore investor confidence, strengthen transpar- ency, and improve the functioning of the internal market for financial instruments, the European Union (“EU”) has started to draft a new regulatory framework for financial markets following the financial crisis. After seven years in the making, the Markets in Financial Instru- ments Directive II 2014/65/EU, and Markets in Financial Instruments Regulation 600/2014 (hereinafter together referred to as the “MiFID II”) entered into force on January 3, 2018. As outlined, above, the new legislation includes both a directive and a regulation. While the regulation has a direct effect within the EU , the directive is to be applied by the member states in national law where there may be national discretion. This article aims to focus on the key aspects of the MiFID II and its eventual impact on third country firms i.e. on Turkey. Scope of Application MiFID II affects stock, bond, commodity and derivative markets, and everyone who works, trades or invests in those markets, i.e. banks, exchanges, trading venues, hedge funds, brokers, pension funds, retail investors, and fund managers across the EU. Moreover, some aspects of the MiFID II are extra-territorial. For instance, the equivalence rule allows third country investment firms to operate in member states on similar terms like an EU invest- ment firm. The following criteria should be met for the equivalence * Article of March 2018