Market reaction as EC confirms MiFID II delay

European CommissionThe European Commission has confirmed a one-year delay to the introduction of new trading rules for capital markets firms under the Markets in Financial Instruments Directive (MiFID II) regime.

Last October, the European Fund and Asset Management Association (Efama) suggested that a delay was prudent given the amount of technical information that had to be absorbed by the industry.

The European Securities and Markets Association (Esma) also called for a delay late last year, reflecting troubles around the building of transaction and position reporting systems, for which the final technical rules had yet to be published. Under the MiFID II regime, Esma has to collect data from about 300 trading venues on about 15 million financial instruments.

Jonathan Hill, commissioner for financial services, financial stability and capital markets union said: "Given the complexity of the technical challenges highlighted by Esma, it makes sense to extend the deadline for MiFID II. We will therefore give people another year to prepare properly and make the necessary changes to their systems.”

The delay has been welcomed by some in the industry. Bobby Johal, managing consultant at regulatory adviser Cordium, said: “This announcement is the clarity that the industry has been waiting for. It’s important that firms take advantage of this extra time to get the necessary systems and processes in place.”

However, others believe that even with an extra year to prepare, certain market participants will struggle. ”A number of participants will find that an extra year is simply not enough to cope with the scale of the change required. Even Maijoor [Steven Maijoor, Esma chairman] recently warned that an additional year may not be sufficient for asset managers to react.”

MiFID II is now expected to come into force on January 3, 2018.

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