The marketplace is waiting in anticipation for ESMA’s final technical guidance – expected this month – on the wide-ranging MiFID II regulation due to come into effect in January 2017.
After delaying publication date from July, ESMA looks set to deliver on time. This is good news, as practitioners surely need as much time as they can get to prepare for MiFID II’s changes. January 2017 is just 15 months away, and much work still needs to be done.
As you’re doubtless aware, MiFID II will both build on its predecessor – MiFID I – and expand its remit beyond equities to fixed income, derivatives and other markets.
MiFID II is both more prescriptive and wide in scope. Its stated aim of bringing new levels of transparency to Europe’s markets translates into new rules around internal order-matching, trade-reporting, testing of algorithms, post-trade work flow and a whole host of other areas of the securities business.
As an example, the rules with respect to systematic internalization will drastically change. Firms may find they now qualify as SIs where previously they did not.
All of these changes require big decisions – on business strategy, operations and technology – from those affected, many of whom have been delaying until they understood the detail of the requirement.
Here is where the hard work begins. The new guidance will require a careful reading to understand the degree to which firms are affected. The big decisions will revolve around how much time, effort and money will be required to comply, and whether certain affected business activities warrant the investment.
Some will identify opportunity.
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