MiFID II remains the main topic in terms of EU financial legislation despite a possible delay in implementing new rules covering European financial markets according to Jake Green, partner in the financial regulatory group dealing with corporate practice at law firm Ashurst in London.
Green told Markets Media: “Some buyside clients are holding back preparations while they wait for sellside solutions. Sellside preparations have ramped up and if anything the pace is increasing. There is no sense of a slowdown but there is a bit less panic.”
The legislative text says MiFID II is due to come into force in January 2017 but the European Securities and Markets Authority has asked for a delay of one year. The regulator’s request has to be approved by both the European Parliament and Council, which could happen this month.
Steven Maijoor, chair of the Esma, said in a speech last month that “investment firms, trading venues and supervisors need to rebuild their transaction and reference data reporting systems almost from scratch.” Maijoor added: “We will be well into 2016 before the rules are final and the building of these IT systems, which will take at least a year, can really only start when these rules are set in stone. There are similar data and IT issues with the transaction and position reporting requirements in MiFID II.”
Before MiFID II is implemented, the European Market Infrastructure Regulation may already require mandatory clearing for certain standardised over-the-counter derivatives from April 2016.
Nicholas Chaudhry, head of OTC client clearing, market services at Commerzbank Corporates & Markets, said in a report at the end of last year that “whilst it’s accepted that the majority of exchange traded transactions currently meet, or nearly meet these requirements, the infrastructure changes needed to guarantee that all exchange traded transactions achieve these requirements are substantial.”
Chaudhry added that although MiFID II may be two years from implementation, firms need to start formulating a strategy and lining up third-party providers to deliver the market connectivity and support services that will enable activity to continue compliantly and cost-effectively.
Read the full article here.