No 'Resting on Laurels' as MiFID II Looms

Firms that are anticipating becoming newly regulated under European Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term, MiFID II, don’t have any time to rest and should not take the recent implementation delay for granted, said panellists at a recent conference organized by FOW.

“If you are not already covered by MiFID, and you are a direct participant of a venue, or a market maker, or have direct electronic access, you will be required to be authorized,” said Steve Hamilton, Business Development at Curve Global, the London Stock Exchange’s interest rate futures venture.

My concern is it’s a greater burden than it needs to be.

And it’s not just about getting ready to comply with new rules and regulations a firm will be subject to, but even just "simple" processing of documentation satisfying the national regulator that a firm has considered all applicable rules.

“Even with a deferral, we don’t have a huge amount of time as an industry to get…that work done,” Hamilton said.

Dmitriy Serazetdinov, Head of Compliance for trading firm OSTC, discussed a familiar theme: uncertainty.

With about a year left to go until European financial watchdog ESMA is expected to release final technical standards , one of the big concerns for Serazetdinov is “the uncertainty in terms of firms dealing with the legislation in such a big package”.

It may be true that any firm in which Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term is “paramount” will have some experience in keeping regulators aware of business mechanics to some extent, but there is yet work to be done in clarifying what will be explicit or implicit in terms of what needs to be prepared.

Hamilton noted that the regulation risks ultimately resulting in a “tick box and documentation exercise” - an expensive one.

The listed derivatives industry is populated by a number of smaller firms, and he questioned whether the requirements placed on them aren’t more suited to the banking industry, or investment firms with clients.

There has been some effort in the technical standards to build in a degree of proportionality.

“My concern is it’s a greater burden than it needs to be,” he said.

Stephen Hanks, Manager of Markets Policy at UK regulator FCA, said that “there has been some effort in the technical standards to build in a degree of proportionality, but inevitably some of the obligations will be fairly binary in nature, everyone will have to do”.

OSTC’s Serazetdinov said that he's hoping that there is some measure of “future-proofing” the regulation, because prescriptive rules such as those related to technology development become obsolete.

Sam Tyfield, Partner at law firm Vedder Price, warned that everybody will somehow be caught in the net: “It will fundamentally change the relationship that every firm has with its counterparties – whether it’s vendors who are unregulated, or the sell side with their clients…it will fundamentally change the way the industry works together.”