Recent news about a potential delay to MiFID II has prompted many questions from market participants. How long will the delay be? Will all aspects of the regulation be delayed? And most importantly, will there be any changes to the text? Most of these details are still unclear, but the industry now needs to assess the impact of a delay.
The below articles in Financial Times, Bloomberg and Financial News provide a good summary of the key reasons for a potential one-year delay in the implementation of MiFID II:
The primary reason being put forward for any potential delay centres on the technology systems required for MiFID II compliance. Many firms have highlighted that the work needed to complete the IT systems necessary to satisfy the data-reporting requirements could not be completed within the scheduled timeframe supplied by regulators. Furthermore, the MiFID II level-2 technical standards, which will make the rules work in practice, still need to be adopted by the Commission and ratified by both the Parliament and the European Council, a process which could take a minimum of nine months from their release.
With technology at the forefront of a potential delay, Scott Eaton, Chief Operating Officer for MarketAxess Europe and Trax, has outlined how MarketAxess and Trax are preparing for MiFID II whilst also ensuring that their clients are ready to meet the regulatory obligations of MiFID II:
“A potential delay to the implementation of MiFID II/MiFIR has been greeted across the industry with both a sense of relief and anxiety. On one hand, extending implementation to January 2018 would offer the opportunity for firms to better prepare their systems, but on the other, there’s the danger that continued uncertainly could lead the market to re-prioritise resources at the expense of appropriately meeting the regulatory obligations.
As an industry service provider, it is our responsibility to be prepared now, such that we can assist our clients with meeting their regulatory obligations. There still remain elements of the regulatory text that may change, yet significant portions are unlikely to change, allowing MarketAxess and Trax to build solutions in preparation for MiFID II implementation, regardless of a potential delay.”