Many thanks to my lawyer friend Sam Tyfield of Vedder Price who wrote a very interesting email this morning regarding his views on the issues concerning the MiFID II timeline. Previously, many industry practitioners, myself included, have viewed 3rd January 2017 as a drop-dead date for implementation, however Sam raises some concerns as to whether there could be a phased approach or in fact a full delay.
Last week Sam pointed out that the EU Commission indicated a delay to MiFID II would be advisable due to the difficulty of technical implementation. In other words, IT departments can’t build the infrastructure necessary in the remaining time allowed.
Stephen Maijoor of ESMA stated
“it will take some time, and well into 2016, before the text of the RTS [Regulatory Technical Standards] will be stable and final. The building of some complex IT systems can only really take off when the final details are firmly set in the RTS and some of the most complex IT systems would need at least a year to be built. We have therefore raised these timing issues with the European Commission, and the fact that some IT systems will not be ready in January 2017, and the uncertainty this will create as they are needed for the execution of certain elements of MIFID 2. Related to that, we have raised with the Commission whether this uncertainty would need a legislative response with delaying certain parts of MIFID 2, mainly related to transparency, transaction and position reporting”
At a conference in London yesterday Sam was able to discover many in the European Parliament believe that delays in the release of the Commissions Delegated Acts and the finalisation of the RTS are a significant problem for the industry. This was reiterated yesterday by Kay Swinburne MEP at the FIA Expo and it was hinted that the Parliament has significant concerns over some of the RTS and may reject them, pushing the time-line out further.
One area of concern is the difference Germany and the UK / Netherlands view the 3rd country Direct Electronic Access (DEA) issue. Some member states, Germany in particular, will not accept regulation by an Self Regulatory Organisation (SRO) or equivalent regulatory authority outside the EEA to allow DEA to their markets. The UK and the Netherlands believe non-EU firms who are members of SROs overseas should be able to access EU markets via DEA and those two member states were working to convince their colleagues of this.
Sam suspects that, if clarity for 3rd country firms is obtained too late in the day for them to become authorised and regulated by January 2017, any regulatory forbearance will apply only if they have submitted their applications to an EU competent authority in a timely manner but have not yet received authorisation. However it is this author’s view that without a clear timetable for 3rd country firm’s authorisation in whatever means is agreed it is highly likely this whole issue will need to be delayed past January 2017, which begs the question, does the whole of MiFID II need to be pushed back?
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