FREQUENTLY ASKED QUESTIONS
As the revised MiFID II implementation date moves ever closer , we ask market participants to summarise regulatory expectations for the coming 18 months .
Q : WHAT IS EXPECTED BY THE JANUARY 2018 DEADLINE ?
RA : ESMA expects full MiFID II compliance by January 2018 . The to-do list is long and the changes needed are not quick fixes . Best execution and trade reporting are key concerns to all including the buy-side .
Not just connecting to multiple venues but also being able to prove that a particular execution decision was the right one requires heavy technology and infrastructure investment .
Extranet services will alleviate some of that cost but ultimately the buy-side will have to allocate sizeable budget to compliance .
CK : By January 2018 , firms will be expected to have implemented the vast changes to their IT systems and operational infrastructures .
This is particularly the case for buy-side firms , especially the large proportion of whom still rely on legacy systems and manual processes – for these the challenge is significant .
Despite the delay , these preparations should begin now , with an in-depth analysis of data , both pre- and post-trade . These will need to be followed by an assessment of current reporting practices , to allow sufficient time for changes to be made .
The delay [ from 2017 ] should be considered a lifeline rather than an opportunity to put the issue on the back burner – authorities are unlikely to forgive laxity on the part of any firm squandering the opportunity to get it right .
RP : The delay of the implementation of MiFID II , while still subject to a ratifying vote , has elicited a collective sigh of relief – but that initial reaction has been proven to be rather short-lived .
A second delay to these rules being by all accounts very unlikely , what was regarded as impossible to achieve by January of 2017 is now only slightly more achievable by January of 2018 . What is certain is that the investor protection elements of MiFID II will have far-reaching effects on the number and complexity of the products being offered , stricter governance in compliance , and the real possibility that some firms may decide that they are unable to transform their businesses , and close as a result .
60 | THE TRADE MiFID II HANDBOOK www . thetradenews . com