Major Adjustments on the MiFIR Front
Chris Pickles of the FIX Trading Community shares his thoughts on the effects of MiFID II postponement and the reasons why it happened
What will the ramifications of MiFID II's postponement be for MiFIR?
There are still questions about details that firms are just realizing they need to ask regulators. Firms simply hadn't realized the impact of moves such as the European Securities and Markets Authority's (ESMA) publication of reference data free of charge. Firms need to work out the interrelationships of MiFID II and MiFIR with the Alternative Investment Fund Managers Directive and Solvency II, as well as the UK's Market Abuse Regulation. The postponement gives all financial services segments time to work out what it means for their business models and to make changes. Thanks to ESMA, investment firms whose use of reference data is limited by licenses will be able to get that data license-free. All the contracts that control the use, re-use and redistribution of reference data throughout the data supply chain will need to change.
Was the postponement of MiFID II compliance by a year to early 2018 justified?
The postponement was very much justified due to the need for greater clarity on issues that MiFID II addresses. Some of the directions proposed under MiFIR and the draft technical specifications involve significant change for thousands of investment firms internationally. Take the proposed requirement to use ISINs to identify exchange-traded derivatives, when ESMA had previously made it clear that it recognized that ISINs were rarely used for derivatives. Changing central data management systems for universal banks that operate internationally is no minor task. So many other investment firm systems depend on those central data management systems.
What was the true cause of the postponement?
One of the key elements of content and timing that led to the postponement was the release of the final version of ESMA's proposed technical specifications, its recommendations to the European Commission, which decides whether to agree or dispute some or all of the specifications. If market participants think changes are still necessary, they must express that to the commission and the European Parliament, rather than to ESMA. Market participants did so, and as a result, the parliament considered the readiness of ESMA's report processing systems for implementing MiFID II, along with issues about reference data and instrument identification. It's better to allow more time so market participants and regulators get it right.
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
BlackRock, BNY see T+1 success in industry collaboration, old frameworks
Industry testing and lessons from the last settlement change from T+3 to T+2 were some of the components that made the May transition run smoothly.
How ‘Bond gadgets’ make tackling data easier for regulators and traders
The IMD Wrap: Everyone loves the hype around AI, especially financial firms. And now, even regulators are getting in on the act. But first... “The name’s Bond; J-AI-mes Bond”
Can the EU and UK reach T+1 together?
Prompted by the North American migration, both jurisdictions are drawing up guidelines for reaching next-day settlement.
Waters Wavelength Ep. 293: Reference Data Drama
Tony and Reb discuss the Financial Data Transparency Act's proposed rules around identifiers and the industry reaction.
Clearing houses fear being classified as DORA third parties
As the 2025 deadline looms, CCP and exchange members are seeking risk information that’s usually deemed confidential.
Industry not sold on FIGI mandate for US reg reporting
Banks’ and asset managers’ tortured relationship with Cusip numbers remains tortured, as they tell regulators to keep the taxonomy in play.
T+1 shift sees out-of-hours human resourcing costs spike by as much as 20%
New research finds that trading firms are experiencing increased labor costs—which could be a boon for outsourced trading.
CBOE and Aquis to make bid for European equities tape
The challenger exchanges have plans to become the second public bidder for provider of the European equities tape, following EuroCTP’s incorporation last year.