The European Union (EU) has confirmed that the introduction of the Markets in Financial Instruments Directive (MiFID) II, a key piece of legislation affecting investment intermediaries, will be delayed for up to one year.
MiFID II was due to take effect from January 3 2017, but European Commission (EC) official Martin Merlin conceded that the date might have to be put back to January 2018 “if we want to have a smooth and effective implementation”. However, the EC insists that the delay will not involve any dilution of the rules and regulations outlined in MiFID II.
The proposed delay reflects the growing scope and ambition of the legislation, which originally aimed to update EU rules intended to encourage cross-border trading. However, in the wake of the 2008 financial crisis Brussels promised to produce a “single rule book” that would address the various abuses exposed by the crisis.
Esma chairman Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA) also described elements of the original MiFID II timetable as “unfeasible” and commented: “This relates to the fact that it will take some time, and well into 2016, before the text of the regulatory technical standards (RTS) will be stable and final.
“The building of some complex IT systems can only really take off when the final details are firmly set in the RTS and some of the most complex IT systems would need at least a year to be built.”
However, the Financial Times reports that others are concerned that a delay could stall institutions’ preparations for MiFID II. Johannah Ladd, secretary-general of the European Principal Traders Association (EPTA), told the paper: “The momentum has gone. Already people have taken their foot off the gas. This doesn’t help firms’ implementation plans in all cases.”
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