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Regulatory Change Management

MiFID II progress summary report: Why there’s still work to do

Stephanie Waters

26 Apr 2018

Thomson Reuters Risk & Compliance Summit – Holistic approach to regulation session

Two high-profile regulatory events have taken a closer look at MiFID II progress and highlighted the work still to be done in areas such as data management and LEI compliance.


  1. Market participants are content with MiFID II implementation, with most thinking there will only be “marginal changes” going forward.
  2. MiFID II and GDPR highlight importance of a holistic approach that allows firms to strategically plan for regulation.
  3. The six-month ESMA deferral of ‘No LEI, No Trade’ is not expected to be extended and will come into force in July.

Even with the MiFID II regime more than three months old, the talk at recent industry events has continued to be dominated by the EU directive and how markets have coped.

The overall feeling is that MiFID II has been adopted by the industry better than most expected, but still with some teething issues.

Two recent events held in London — the Data Management Summit, hosted by A-Team Group, and the Risk and Compliance Summit — considered MiFID II progress and gauged the views of market participants.

Key takeaways from the events included the value of a holistic approach, particularly in conjunction with GDPR, while there was also talk about finding the right model for consolidated tape providers.

London Data Management Summit

The MiFID II panel session at the Data Management Summit discussed the ongoing challenges of regulation, including new sources of data and data standards such as the Legal Entity Identifier (LEI), which comes into force in July.

John Mason, Head of Regulatory & Market Structure Strategic Response & Propositions, talked about the need for a holistic approach to MiFID II and GDPR when it comes to the handling of personal data.

He said the two directives highlight the need to step back and strategically plan for regulation, rather than treating each as a one-off compliance process.

If there is a single trade that you may have to report on in different ways, having a holistic approach to regulatory implementation will help efficiency in the long run.

The discussion then moved on to shifts in market structure as to where trades are executed as a consequence of the Systematic Internaliser (SI) regime and the Double Volume Cap.

Furthermore, there were questions about whether transparency as a result of MiFID II is delivering what is expected and whether there is a need for a publicly funded consolidated tape provider?

Key takeaways from the discussion:

  • Markets have settled in, but there is still work to be done.
  • Ongoing data management challenges include new sources of data.
  • Shifts in market structure as a consequence of SI regime and the Double Volume Cap.
  • Is transparency delivering what was expected?

Risk & Compliance Summit

At the London Risk and Compliance Summit, the holistic approach to regulation was also front of minds during the Risk Ready breakout session.

Stephen Hanks, manager of MiFID Coordination at the UK’s Financial Conduct Authority (FCA), pointed out that innovation is encouraged by the FCA in order to help with regulation harmonization.

Regulators have recognized that the burden of reporting in different ways needs addressing, and both ESMA and the FCA, via its Project Innovate and TechSprints, have encouraged investment firms to think about taking a holistic approach.

In terms of what’s next for MiFID II, our audience poll found that the majority (73 percent) thought there would only be marginal changes, with 2 percent expecting no change at all.

The majority of the audience expect marginal changes to MiFID II, per the session’s poll.

The discussion considered the MiFID II 2018 timeline, with Best Execution obligations, the SI regime and the end of the six-month ESMA deferral of ‘No LEI, No Trade’.

There was agreement that the LEI delay is not expected to be extended, bringing that edict into force in July.

Discover how we can help you thrive in a MiFID II world

The consolidated tape provider topic was again mentioned, with the most likely outcome being a review to identify the right model for Europe.

With additional parts of MiFID II still needing to be incorporated into the regulatory framework of organizations, the discussion turned to the second audience poll focused on the upcoming implementation of GDPR on 25 May.

Only 3 percent of the audience confidently said they were ready and compliant. A further 43 percent felt they were partially compliant but will be ready, while the remainder were just beginning to look at the directive.

Brexit planning was mentioned, in particular reference to the FCA’s intention to keep to a high standard of regulation and ensure adherence to EU regulations during the transition period.

Key takeaways from the discussion:

  • MiFID II came into force quite well and its 2018 known timeline is coming into play.
  • The six-month ESMA deferral of ‘No LEI, No Trade’ is not expected to be extended, bringing it into force in July.
  • The consolidated tape provider topic is likely to result in a review to identify the right model for Europe.

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