The European Commission (EC) officially announced today that it is delaying the implementation of MiFID II rules until January 2018. The announcement was expected as feedback to the EC from both the buy-side and sell-side was that many pockets of the financial industry would be unprepared to meet MiFID II requirements by January 2017.
Introduced by the European Securities and Markets Authority (ESMA), MiFID II is a wide ranging group of rules focused on increasing market transparency through pre- and post-trade reporting. Included in reports is data alternative pricing and available volume for trades, millisecond timestamps of orders and counterparties.
While the publishing of the new data would provide market participants with more data and transparency, the implementation of MiFID II comes with a reporting burden that companies will need to comply with. Specifically, buy-side firms are being viewed as prime beneficiaries of MiFID II as it will provide important price discovery data for them. Nonetheless, many groups, especially those representing smaller firms, had desired more time to better understand how to comply with the reporting rules.
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A missed opportunity
However, not everyone believes a delay was warranted. In a company blog post, financial technology and data firm Fidessa, called the delay “a missed opportunity”. According to Fidessa, the postponement should have been based on industry participants agreeing on specified technology standards than just creating an arbitrary date.
Elsewhere, Jay Iyer, Director of Protiviti, whose firm provides consulting to the financial industry, stated: “Following the announcement this morning, the central message coming from our clients is that much of what comprises MiFID II is already well known and it is time for firms to press ahead with their implementation projects, regardless of the delay.”
However, Iyer added: “The delay may provide an opportunity for firms to be more efficient in their planning, and coordination of their change initiatives in a more effective manner to avoid duplication of effort where there may be overlaps. We expect there will be less regulatory forbearance on areas like data quality and the readiness of systems now the timetable is longer to implement the significant changes required.”