MiFID II and Plato: Without Further Ado

You might have heard a strange sound permeating throughout the capital markets back in February, a sort of communal exhalation following a few months of being held in. It was, in fact, the sound of reprieve, as the rumors surrounding a delay to the introduction of MiFID II (or, to give the legislation its full title, The Regulation We Just Chose Not to Think About for a While) were officially confirmed.

The sighs of relief at being granted an extra year to get ready for MiFID II may or may not be justified, depending on which part of the market you work in, but the regulators finally acknowledged that implementing the rules in January 2017 just wasn't going to work.

Now, however, efforts are once again turning to compliance in this particular area as firms know they aren't going to get a second stay of execution.

There's a lot still to be done before January 3, 2018, and, rather unhelpfully, a lot of ambiguity on some rather key issues. Algo testing is one such subject that still lacks some much-needed clarity, while problems with trade reporting are giving buy-side firms specific headaches. And then there's the dark pool double volume cap, coming into force in January next year, which just seems designed to confuse people as much as possible.

Many vendors, specialists and consultants are ramping up their efforts here to make sure their clients are going to be fully compliant come the day in question. IHS Markit recently announced it is set to launch a new tool in early 2017 for asset managers to comply with the new rules on how research is used and obtained by financial advisors, while telecom provider Colt has announced its financial extranet is enabling connectivity to a cloud-based ecosystem of MiFID II-compliant solutions.

Despite the need to get down to business, there is still a lot of talking going on. The European Securities and Markets Authority (ESMA) is currently prepping a Q&A on secondary market issues, including the double volume cap, systematic internalizers, and the definition of multilateral systems.

Surely the time for talking has passed by now.

Plato Powers On
Plato Partnership, the consortium of buy-side and sell-side firms targeting the European equities trading landscape, has seemingly come back to life this week, with its announcement that it will be co-operating several of Turquoise's dark pool services.

It's the first real news to come out of the group in just over a year, the last being that of "exclusive discussions" between the two parties, after Turquoise won Plato's online beauty pageant.

To be perfectly honest, I was a little surprised by the news; Plato was one of the earliest news items I worked on at Waters and, perhaps a little naively, I bought into its ethos of improving the market model for block equities trading in Europe through transparency and research.

But as the months dragged on with little sign of tangible developments, I started to think that perhaps the project wasn't going to be able to live up to its promised potential—and the departure of former project director Stephen McGoldrick didn't help either.

So it's encouraging to see that the group is now going to start knuckling down to some serious work. It's also interesting to see just how much influence the buy side now holds in terms of being able to change the market structure, primarily through its desire to keep trading large equities orders.