The (Mifid) Game is Afoot
Buy-side firms in the US should begin preparations for European regulation as a matter of urgency.

I’m speaking, of course, about the litany of press releases we receive, variously proclaiming the severity of the upcoming January 3, 2018, apocalypse, when the revised Markets in Financial Instruments Directive (Mifid II) goes into effect.
We’ve both written and talked—on the podcast—extensively about this subject before, not to mention trying to figure out exactly how to cover these types of stories. Mostly, we don’t, because in our view a survey from a vendor showing results that would lead to people buying that vendor’s products should be treated with a pinch of salt, at best.
That doesn’t mean there isn’t a problem, however. In Europe, Mifid compliance has been something of a known quantity for quite some time. Most large buy-side firms I speak to are well on their way to compliance, if only because there is a lingering suspicion that if any of the big boys were to be caught on their back foot, then they may be prime targets for being made an example of.
Among those smaller asset managers, the problem is perhaps more acute, owing to the resources needed to ensure that reporting under Mifid, research unbundling, and all that good stuff is in place.
In the United States, the picture is less clear. I’ve had numerous discussions with people over the past few weeks that paint a picture of what I term sudden awareness. As in, US firms are realizing that Europe’s extraordinarily complicated package of regulatory reform may have a greater impact on them than they thought, and that it may stretch beyond having to pay for some research.
It’s somewhat alarming to hear that these firms are only now—mere months away from January—beginning to try to wrap their arms around what Mifid will mean for them, and finally understanding that just pulling back European operations may not be sufficient.
What’s even more alarming is that regulators have made it quite clear that while they may not be expecting 100 percent compliance on day one, at the very least they expect significant efforts to be made towards that.
Then, of course, is the creeping realization that the timeframe is shorter than expected, given the traditional code freeze in December around the holidays and, in some cases, weeks before that.
As such, given that the hot summer days in New York, Boston and elsewhere in the US are beginning to cool into the fall, it’s becoming clear that this Christmas may not be a very merry one for asset managers affected by Mifid. Which, ultimately, may be the vast majority.
As we’ve said numerous times before, this is the big one, ladies and gentlemen. There won’t be another year’s delay, and the New Year may bring nasty surprises for those who don’t put the work in now. It’s time to get moving.
Then, perhaps, we can talk about the next big things on the horizon, like the General Data Protection Regulation or the Fundamental Review of the Trading Book. Emphasis on the ‘fun.’
This week on Buy-Side Technology:
- Surveys are often silly. But they can be useful when they get specific, as my colleague John Brazier explores.
- Machine learning is at risk of being pretty well-hyped, so Waters prepared a list of actual, real-life use cases this month for your consideration. Nasdaq also incorporated it into trade surveillance on its Nordic markets, which you can read about here, and listen to here.
- On the subject of Mifid II and US asset managers, IMP has teamed up with UnaVista for Mifir reporting. If you don’t know what that is, I refer you to my above comments.
- In people moves, the London Stock Exchange’s Mack Gill, formerly CEO of its vendor arm, MillenniumIT, joined Torstone in the UK.
- Finally, 20 years after the last time the US shortened its settlement cycle, it did so again on September 5. You can read our fairly exhaustive coverage on the subject by searching for it on the site, or by following these links to the account of how the industry got to this point, whether blockchain could facilitate T+0 settlement, and the day itself. Look out for more in the weeks to come.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
Experts say HKEX’s plan for T+1 in 2025 is ‘sensible’
The exchange will continue providing core post-trade processing through CCASS but will engage with market participants on the service’s future as HKEX rolls out new OCP features.
No, no, no, and no: Overnight trading fails in SIP votes
The CTA and UTP operating committees voted yesterday on proposals from US exchanges to expand their trading hours and could not reach unanimous consensus.
Big xyt exploring bid to provide EU equities CT
So far, only one group, a consortium of the major European exchanges, has formally kept its hat in the ring to provide Europe’s consolidated tape for equities.
Jump Trading CIO: 24/7 trading ‘inevitable’
Execs from Jump, JP Morgan, Goldman Sachs, and the DTCC say round-the-clock trading—whether five or seven days a week—is the future, but tech and data hurdles still exist.
Pisces season: Platform providers feed UK plan for private stock market
Several companies in the US and the UK are considering participating in a UK program to build a private stock market composed of separate trading platforms.
How to navigate regional nuances that complicate T+1 in Europe
European and UK firms face unique challenges in moving to T+1 settlement, writes Broadridge’s Carl Bennett, and they will need to follow a series of steps to ensure successful adoption by 2027.
Nasdaq leads push to reform options regulatory fee
A proposed rule change would pare costs for traders, raise them for banks, and defund smaller venues.
The CAT declawed as Citadel’s case reaches end game
The SEC reduced the CAT’s capacity to collect information on investors, in a move that will have knock-on effects for its ongoing funding model case with Citadel.