MiFID II Wobble
With just over a year to 3 January 2017 Steven Maijoor, the Chair of ESMA, delivered an update on ESMA work in relation to MiFID II to the Economic and Monetary Affairs Committee at the European Parliament on 11 November 2015. In his speech, Mr Maijoor explained that not only was the timing for the implementation of rules and the building of IT systems ‘extremely tight’ but that there were also a few areas where the calendar is ‘already unfeasible’. The latter is down to the need for certain regulatory technical standards (RTS) to be finalised before the necessary complex IT systems can be built – in other words some IT systems will not be ready in January 2017. ESMA has raised with the European Commission the possible need for delaying parts of MiFID II mainly related to transparency, transaction and position reporting. The comment was made that the required projects were probably more complex than those triggered by MiFID I, which required three years of implementation.
(NB: MiFID II implementation later delayed to 3 January 2018)
At the time of this article there is no clear indication whether the European Commission will either delay or phase in certain elements MiFID II – or indeed whether they will take any action at all. Any delay will require the European Commission to propose an appropriate draft law which will have to pass through the normal approval process. Having said that, a recent press release indicates that the European Parliament are ready to accept a one-year delay in the implementation of MiFID II, subject to certain conditions. For now, until further information is known, the safest course of action for firms would be to continue with their MiFID II planning (as far as is possible) on the assumption that 3 January 2017 remains the MiFID II ‘live date’.
As might be expected this is not something that came out of the blue. On 2 October Mr Maijoor sent a letter and attachment (see links below) to the Directorate-General for Financial Stability and Capital Markets Union (DG FISMA) sharing analysis on the feasibility of having all required systems in place by 3 January 2017 and inviting further discussions (DG FISMA is a ‘department’ of the European Commission and is responsible for initiating and implementing policy in the area of Banking and Finance).