Golden Copy: Thoughts About MiFID II Postponement

Have excuses won out?

As talk began last year that the European Commission was likely to postpone its deadline for compliance with MiFID II from January 2017 to January 2018, I weighed the reasons and justification for this postponement in these Waters and Golden Copy columns.

Maybe the more appropriate question is whose excuses—the industry's or regulators'?

Although some in the industry were saying they needed to re-evaluate budgets and figure out technology solutions to manage data for several compliance efforts, others in trading operations said they were prepared.

Reporting on the European Commission's decision, our sister site Buy-Side Technology noted that the European Securities and Markets Authority (ESMA) would not have been ready to collect data for 15 million financial instruments, from 300 venues, by 2017.

So, on balance, although the industry as a whole may not have been completely ready, the regulatory authority that has to administer MiFID II was not ready at all, and the regulation couldn't realistically go forward without its data collection capability in place.

To say that the only reason for the extension of the deadline was successful industry lobbying seems shortsighted now. Often that is the case when regulation affecting financial services industry operations gets delayed or eased. Also, regulators often are accused, rightly or wrongly, of failing to define specifics for regulation or directives. Yet, that was not the issue with MiFID II. The problem was sheer inability or lack of resources to implement compliance.

This raises a new question—will ESMA be able to muster the resources and capability given an extra year to do so?