With MiFID II less than two months away, our Market Readiness Report reveals the challenges still facing organizations in the run-up to this major directive.
Having successfully adapted to a continuous wave of new regulation since the financial crisis, businesses and financial institutions are facing their biggest test yet.
MiFID II will fundamentally change the way capital markets operate in Europe, with the ripples being felt right across the world.
As organizations gear up for the 3 January deadline, our new MiFID II Market Readiness Report has surveyed nearly 5,000 senior regulatory and compliance staff impacted by the rules.
The headline research showed that 37 percent felt their organization was not fully prepared, suggesting that a lot of clarification and catch-up work is required.
This chimes with our MiFID II Implementation Summit, when only 16 percent were confident they would be compliant, 58 percent said they were unsure and 26 percent not confident.
Watch video — MiFID II Market Readiness Report – Will the market be ready?
Cost of MiFID II compliance
Given the issue of preparedness, it is perhaps not surprising that 72 percent expected their organizations to dedicate more time and attention to preparing for MiFID II.
Just over a quarter (26 percent) felt it would require significantly more time and attention.
Asia tops the charts in this respect, with 31 percent expecting to spend significantly more time and attention on compliance than at present.
This won’t come cheap, with compliance costs forecast to increase by 28 percent in the next 12 months and remain at this heightened level for the next three years.
Non-EU respondents had slightly higher cost expectations than EU ones.
In fact, those professing to have the most knowledge about MiFID II put the cost of compliance at its highest level, suggesting an average spend of US$158 million over the next 12 months.
The data management challenge
The wide scope of MiFID II means that our respondents have no shortage of areas to invest their compliance spend.
One common element in many of these challenges is data.
To comply and operate efficiently in a post-MiFID II world, organizations will need to be able to create, access, absorb and aggregate data from a variety of sources.
Yet 60 percent of respondents said they did not have all the data they need.
Key challenges named by respondents were the sheer volume, complexity, sourcing, reconciling and reporting of data.
Many respondents were looking to Thomson Reuters, the world’s largest provider of financial reference data, as a MiFID II solution provider.
Challenge into an opportunity
Despite the initial pain, our report highlights the broad feeling that MiFID II will put the industry and its customers on a stronger and more secure footing.
Watch video — How can you turn MiFID II compliance from challenge to opportunity?
As a recognized leader and trusted ally in the market, Thomson Reuters is strongly positioned to support organizations as they address the complex data needs and solve the key challenges of MiFID II.