MiFID II – The Morning After The Night Before

It’s the morning after the night before, or rather the morning after MiFID II came into force!

With detailed information on billions worth of transactions being reported on, the FCA have been a front runner in the implementation of MiFID II. Indeed MiFiD II is seen as one of the most significant pieces of European legislation to have come into force for the securities markets since the collapse of Lehman Brothers. The UK are committed to the rules, providing assurance to international traders that its business as usual in the City of London, despite Brexit looming.

Interesting to see then that 3 January 2018 has passed some EU member states by as they have not yet implemented MiFID II. Deutsche Borse, the German futures exchange has been granted a 20 month postponement by BaFin the German financial services regulator. Even more interesting is that yesterday the FCA granted a reprieve to the ICE Future Europe Exchange and the London Metals Exchange. These exchanges now have until July 2020 to comply with MiFID II.

Mixed messages or full steam ahead for MiFID II? And do regulators have the capability to monitor markets in real time? Steven Maijoor, Chairman of the European Securities and Markets Authority (ESMA) tasked with the roll out of MiFID II was cautious regarding yesterday’s launch citing that there could be issues “in the coming days or the coming weeks”.  While the trading volumes for equities and bonds remains largely unchanged, it appears that the euro-dominated interest rate swaps market has taken a dip.

Whatever the situation, firms need to be mindful of what Mark Steward, Director of Enforcement and Market Oversight at the FCA had to say in response to the recent Merrill Lynch fine:

“There needs to be a line in the sand. We will continue to take appropriate action against any firm that fails to meet requirements.”

To meet the FCA’s expectations your solution mantra should be evidence, accurate and timely, fit for purpose, adequate resourcing and performing properly. Happy New Year!

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