Is MiFID II Deadline Delay Justified?

The apparent delay of the compliance deadline for MiFID II, the European Union's Markets in Financial Instruments Directive regulating investment services, beyond the current January 3, 2017 deadline, raises more questions about the introduction of the rules in the first place.

Was the 2017 deadline set by the European Commission, the EU's regulatory body, realistic? Did it give the industry enough time to meet the requirements of MiFID II, including its associated MiFIR rules and Recommended Technical Standards (RTS), which flesh out the data transparency requirements and ways that data management will be affected by required market infrastructure changes?

The European Securities and Markets Authority (ESMA), by all accounts, was lax and late in issuing specific technical guidance—only issuing the aforementioned RTS this September. So it's hard to argue that the industry's apparently successful push to delay the MiFID II deadline for as long as a year, into early 2018, was made because the industry had dragged its feet on the work necessary to comply.

However, with still more than a year before the original 2017 deadline, it is hard to believe that the industry can't get the necessary work done in that amount of time. Certainly a full year delay seems extreme. After all, as Linedata's Matt Gibbs says in sister site Sell-Side Technology's coverage of this issue, his company has already implemented a lot of the necessary changes for electronic trading.

The issues that others cite, such as the need to re-evaluate technology budgets and figure out technology solutions that can work for managing data across multiple regulatory compliance areas, are either "nice-to-haves" or fall outside the realm of actually being prepared to comply. Firms should be doing these things on their own timetable, not trying to bend the deadline on that basis.