MiFID Compliance Remains a Work in Progress

MiFID II is due to come into force in January 2018, yet many firms are still a long way off compliance. This wide-ranging legislation is being put in place to strengthen investor protection and increase transparency around financial instruments, and the venues where such instruments are traded. For buy-side firms, the Regulation is important as it will demand a significant increase in reporting obligations. For the first time, asset managers will need to aggregate both pre- and post-trade data, increase transparency around record trade executions and enrich the data they collect for post-trade compliance reporting.

A recent industry survey, however, suggests that asset managers are still unprepared for the Regulation, with 54 percent of respondents stating this is because they have not received sufficient information from their regulator. Most firms surveyed are leaving compliance until the last minute, and just 7.1 per cent saying they plan to be compliant now. A full 44 percent say they will only look to achieve compliance after the introduction of MiFID II in January. A separate research project from the SIX Swiss Exchange found that more than half of respondents saw increased regulation such as MiFID II as their biggest challenge.

RIMES advice to buy-side firms is to start looking to achieve compliance immediately. The time to act is running out. Already in the UK, the Financial Conduct Authority (FCA) has called on firms to apply for licences under MiFID II by July 3 this year. The regulator has also stated that ‘we expect firms to be busy considering what impact MiFID II will have on their business and to act accordingly’. Additionally, Steven Maijoor, head of ESMA, has gone on record to say that there will be no further delays to the implementation of the Regulation. Indeed, he intimated that ESMA could look to supervise a new class of data repositories under the Regulation called Approved Reporting Mechanisms.

As buy-side firms look to meet this considerable challenge, managed compliance solutions, such as RIMES RegFocussm service, will help enormously. RegFocus offers a sustainable, cost-effective solution to the challenges of MiFID II compliance. Through the service, firms can immediately access the compliance reporting systems and expertise they need to comply with MiFID II. This approach means that the complexities of what is an incredibly dense legislation can be largely mitigated, leaving firms free to proceed with their core business activities.

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