Hill marches up and down again - MiFID II delayed

16 February 2016

Last week, it was confirmed that MiFID II will be delayed for another year.

The Right Honourable Lord Hill of Oareford, the European Commissioner for Financial Stability, Financial Services and Capital Markets, confirmed that the implementation of MiFID II will be delayed until 3 January 2018.

MiFID II is designed to regulate all firms that provide services to clients in connection with a variety of "financial instruments" (including, but not limited to, shares, bonds, derivatives etc).  It also regulates the platforms or "venues" on which the financial instruments are traded.  Unfortunately for the national and European regulators, this means collecting data on 300 trading venues and on approximately 15 million financial instruments.

The European Commission has now confirmed (inevitably) that more time is needed by firms and regulators themselves to get ready for the new regulation.  In Commission-speak, the official reason for this delay "lies in the complex technical infrastructure that needs to be set up for MiFID II package to work effectively".  In other words, and as confirmed by the European Securities and Markets Agency (ESMA) in its request for a delay in October 2015, the IT systems of regulators and market participants do not currently have the capability to handle and transmit the volume of data captured under MiFID II.

Despite the confirmed delay of one year, the Chair of ESMA, Steve Maijoor, has previously suggested that a delay of one-year may not be enough – therefore, we may find ultimately that MiFID II is delayed again and 3 January 2018 will not be the actual implementation date.

Of course, hanging over the implementation of MiFID II (and all other outstanding pieces of EU legislation) is the imminent 'Brexit' vote here in the UK.  Downing Street has hinted at a vote in June 2016 if David Cameron can secure the terms of his renegotiation this week.  Just how MiFID II (and, indeed, the position of Lord Hill – the European Commissioner steering this legislation) is affected by a "leave" vote remains to be seen.  However, even in the event of a "leave" vote, we suspect that MiFID II will be incorporated into UK law in some form.  To facilitate a smooth (as possible) transition and continued access to the single market, we suspect that Westminster will agree to continue the implementation of MiFID II.

In the meantime, the national and European regulators will carry on the struggle to implement this voluminous piece of regulation.


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