MiFID II Delay: Not an Opportunity to Relax

No doubt there was a collective sigh of relief from firms in Europe when regulators announced a year's delay to the implementation of the Markets in Financial Instruments Directive (MiFID).

But this is no time to sit back and relax, say experts.

"It's inevitable that whenever the word ‘delay' or postponement is used, there's a natural temptation to ease off and become complacent, because firms now have 24 months to complete the project," says Cian O'Braonáin, global regulatory reporting practise lead at Sapient Global Markets in London.

"That's incredibly dangerous, because the extra time should be used to understand the complexity, the IT requirements and also testing and re-testing to ensure reporting completeness and accuracy."

According to Sapient's polling of 500 industry participants during a recent webinar, says O'Braonáin, only 10% considered themselves "very ready" to face the forthcoming regulation.

"Our survey found that 50% of firms cited either a lack of internal data governance or poor data quality as the biggest challenge they face in preparing for MiFID II compliance, while another 17% said poor technology and manual processes are their main hurdles."

Some 52% plan on leveraging their existing reporting infrastructure to comply with MiFID II reporting requirements. "This means despite recognizing their own deficiencies, they still plan to utilize those same support systems," says O'Braonáin. "This will only set organizations back."

But it's not too late for firms to devise a strategy for MiFID II, says O'Braonáin.
"The delay is an opportunity to invest in new ways of doing things. I would hope that the additional time means firms move away from the more tactical approaches of implementing and stringing together multiple point solutions, to a more strategic view. Some firms are already going down that route, but there's now an opportunity to take a more considered and planned approach to the regulation."

MiFID II reporting—and more regulatory issues—are on the agenda at the European Regulation Roadshow, which will be held in Paris on March 17 and is hosted by HSBC Securities Services, as well as Inside Reference Data, Inside Market Data and Waters Technology. Click here for the agenda.