T-Minus One Year: It’s Now or Never on Mifid II

John hopes that preparations for the incoming regulation are top of the New Year’s resolutions pile for asset managers.

jan-new-year

It is (almost) one year to the day until the capital markets will finally experience the arrival of Mifid II. With less than 365 days left for the asset management industry to prepare, John wonders how many will embrace the spirit of change.

January is paradoxically the most optimistic and bleakest time of the year for some; while the cold, dark days are a far cry from the festive cheer just passed, it's also a time to make changes for the better, to be more than we have been in the past.

As such, it's rather fitting that Mifid II will finally be implemented on January 3 next year. While regulatory compliance isn't exactly optional, the industry has now reached its tipping point. For those firms that have yet to start work on implementing necessary systems or putting adequate policies in place, it's surely now or never.

Now you may be thinking, "Haven't we been here before though, John?" and you'd be right. Back at the start of September last year I said that the time for talking was over and that action was now required, despite the lingering vagaries around some key elements of the regulation.

And of course it's not as if each section of the regulation comes into force at the same time on January 3, 2018, with various parts spread out either over the course of this year or after next year's go-live date.

Generally speaking, there's no real reason for firms not be fully compliant by this time next year, especially when the year-long delay is taken into account. The question now is: How much longer will we be hearing that Mifid II preparations are either a top priority for asset managers, or, failing that, what the excuses for non-compliance in 2018 may be.

The MAR Test

My colleague, Aggelos Andreou, this week wrote about the buy-side's reaction to the implementation of the Market Abuse Regulation (MAR) in July last year, which introduced stricter rules around surveillance, market manipulation and insider dealing.

While it seems that the majority of the buy side were able to get their house in order prior to the new rules coming in, some took advantage of a more lenient approach by regulators to earn a period of grace. I'm sure that by now we've all heard similar stories of planned procrastination within certain sections of the market concerning Mifid II readiness, with some participants either hoping to be overlooked or simply preferring to take a fine instead of the arduous work required.

Whatever happens in January next year, much still needs to be done. While MAR can show some indications of the readiness of the buy side for complicated new regulation, Mifid II is an entirely different beast with many more tentacles to untangle. Will a year be long enough for those laggards that have so far dragged their heels? My feeling is that no, it really isn't.

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