ESMA asks for MiFID II delay
17 November 2015 Paris
Image: Shutterstock
The European Securities and Markets Authority (ESMA) has requested a delay to the implementation of Markets in Financial Instruments Directive (MiFID) II, with chair Steven Maijoor saying that work on the regulation is “by no means finished”.
ESMA published its final draft technical standards on MiFID II in September, and the next technical standards package is in the pipeline.
Speaking to the Economic and Monetary Affairs Committee of the European Parliament, Maijoor said that although this package is not as large as the previous one, it will include standards on things like position reporting, which “represents one of the many significant implementation challenges for national supervisors and ESMA”.
He suggested that building the IT infrastructures necessary to comply with these standards can only really begin once the standards are finalised, and argued that these systems will be integral to the successful implementation of MiFID II.
He said: “I am not going to surprise anybody in the room when saying that the timing for stakeholders and regulators alike to implement the rules and build the necessary IT systems is extremely tight. Even more, there are a few areas where the calendar is already unfeasible.”
ESMA has therefore “raised these timing issues with the European Commission”.
Specifically, Maijoor referred to the IT required for financial instruments reference data and transaction data, pointing out that many investment firms, trading venues and supervisors are building reporting systems from scratch. He added that ESMA itself its building technology in order to collect this data.
“All these projects are large and complex,” he said. “Probably more than those triggered by MiFID II, which required 3 years of implementation.”
In response to the requested delay, Grant Lee, an asset management partner at PwC suggested that clients would welcome a longer timeframe for implementation. However, he also said that, until the European Commission officially announces a delay, PwC will work with its clients towards the original implementation date of 3 January 2017.
Lee said: “The potential changes required by the directive and [Markets in Financial Instruments Regulation] are immense and with key text still outstanding, embedding the wholesale changes during 2016 is a massive stretch for the industry. This is before considering and working through the secondary impacts for asset managers from interaction with sell side firms.”
He added: “As the industry remains on tenterhooks, the timing of an announcement from the European Commission will be key, as the value of a delay erodes the longer it takes. If the delay were to be granted in mid-2016 this would be too late for most - firms are seeking clarification now on their timetables and deliverables."
ESMA published its final draft technical standards on MiFID II in September, and the next technical standards package is in the pipeline.
Speaking to the Economic and Monetary Affairs Committee of the European Parliament, Maijoor said that although this package is not as large as the previous one, it will include standards on things like position reporting, which “represents one of the many significant implementation challenges for national supervisors and ESMA”.
He suggested that building the IT infrastructures necessary to comply with these standards can only really begin once the standards are finalised, and argued that these systems will be integral to the successful implementation of MiFID II.
He said: “I am not going to surprise anybody in the room when saying that the timing for stakeholders and regulators alike to implement the rules and build the necessary IT systems is extremely tight. Even more, there are a few areas where the calendar is already unfeasible.”
ESMA has therefore “raised these timing issues with the European Commission”.
Specifically, Maijoor referred to the IT required for financial instruments reference data and transaction data, pointing out that many investment firms, trading venues and supervisors are building reporting systems from scratch. He added that ESMA itself its building technology in order to collect this data.
“All these projects are large and complex,” he said. “Probably more than those triggered by MiFID II, which required 3 years of implementation.”
In response to the requested delay, Grant Lee, an asset management partner at PwC suggested that clients would welcome a longer timeframe for implementation. However, he also said that, until the European Commission officially announces a delay, PwC will work with its clients towards the original implementation date of 3 January 2017.
Lee said: “The potential changes required by the directive and [Markets in Financial Instruments Regulation] are immense and with key text still outstanding, embedding the wholesale changes during 2016 is a massive stretch for the industry. This is before considering and working through the secondary impacts for asset managers from interaction with sell side firms.”
He added: “As the industry remains on tenterhooks, the timing of an announcement from the European Commission will be key, as the value of a delay erodes the longer it takes. If the delay were to be granted in mid-2016 this would be too late for most - firms are seeking clarification now on their timetables and deliverables."
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