Pressure is mounting on the European Commission to postpone the implementation of securities market reforms under MiFID II by a year, as banks and brokers struggle to adapt their IT systems to meet the 2017 timetable.
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The principles of the so-called MiFID II legislation, aimed at changing the way financial markets operate, were agreed at the global level during the 2007-09 financial crisis, with key changes including the move of private trading in derivative instruments onto electronic platforms to improve transparency and curbing the size of trading positions which can be taken in certain commodity markets.
But Martin Merlin, a director in the European Commission’s financial services unit, said the preliminary technical view was that a delay was needed, “if we want to have a smooth and effective implementation”. We had a similar situation in 2013 when ESMA asked for a delay to the EMIR transaction reporting rules.
Maijoor acknowledged that time is tight for stakeholders and regulators to implement the rules and build the necessary IT systems required by incoming regulation.
The next technical standards package is already very much in the pipeline and consists of implementing technical standards of a mostly technical nature and also not quite as voluminous as the previous one.
The delay of MiFID II will nearly certainly be welcomed by the European Fund and Asset Management Association (Efama), which has called for implementation to be postponed, partly for fears the directive would be enforced unevenly between EU countries.
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“The Commission’s recognition that Mifid II’s introduction needs to be delayed is not exactly surprising”, said Jeremy Jennings-Mares, a… And we’ll now discuss with the parliament and the council before deciding on a final course of action’. This was always going to increase the risk of delay and with the resilience of the markets at stake, it seems sensible to give European Union and national lawmakers and regulators time to get it right. Added to the complexity of what it governs is the growing complexity of the European Union law-making process itself as well as the increased number of EU Member States.
