Firms have been warned to carry on with their implementation plans for MiFID II as it is possible that the regulations may not be delayed from January 2017.
The new rules covering financial markets in the European Union are due to come into force at the beginning of 2017 but the European Securities and Markets Authority has asked for a delay of one year in the implementation date.
Cian O’ Braonain, director of the regulatory reporting practice at consultancy and technology provider Sapient Global Markets, told Markets Media that firms should keep working on their current implementation plans as it is possible that legislators will not approve a postponement.
“There were similar discussions that the trade reporting requirements under Emir would be delayed but this did not happen and the industry had just three months to get ready which hurt everyone,” he added. “However this time it is Esma that is asking for the delay rather than the industry.”
Last week Esma released a letter sent by chairman Steven Maijoor in October to Olivier Guersent, director general financial stability, financial services and capital markets union at the European Commission, on whether it was feasible to implement MiFID II in January 2017.
Maijoor said: “After discussing this at length with national competent authorities, we came to the conclusion that a number of technically complex elements envisaged in MiFID will not be operational by the time that MiFID II will become applicable This affects mainly the availability of reference data, the new transaction reporting system, those elements of the transparency regime depending on reference data and the position reporting for commodity derivatives.”
Christian Voigt, senior regulatory adviser at trading-systems provider Fidessa, also warned in a blog that the European Commission might not agree to delaying MiFID II.
“We had a similar situation in 2013 when Esma asked for a delay to the Emir transaction reporting rules,” Voigt added. “Back then, the European Commission declined to sanction any extension of the implementation deadlines. For it to succeed now, Esma and the industry may need stronger arguments.”
Voigt also explained that Esma is only suggesting that certain parts of MiFID II be postponed, so large parts of the regulation would still have to meet the January 2017 deadline. “So while delaying MiFID II go-live is an important discussion to be had, implementation teams will nonetheless have to keep the pedal to the metal and push ahead,” he wrote.
Konstantinos Botopoulos, chairman of Market Integrity Standing Committee and member of the management board of Esma said it would make sense to delay MiFID II at the Markets Media Fixed Income summit in London this month.
Botopoulos said on a panel on regulation: “It is practical to delay MiFID II as there is not enough time to finalize the Level II legislation and set up the IT infrastructure early in 2016.”
He explained that Esma has agreed to provide a central facility for instrument and trading data from 27 of 28 member states and it will be almost impossible to set up this hub in time for implementation in January 2017, since some of the participants have only recently come on board.
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