With the final implementation of MiFID II now a mere six months away, the time has come for individual firms to seriously consider how these rules will impact them and the daily running of their business. At AQMetrics, we believe this can best be achieved by meeting with your industry peers in order to discuss, share and collaborate to jointly find workable solutions for the myriad of issues this new regulation presents. And so, with this aim in mind, last week we held our inaugural MiFID II meetup in London, bringing together industry professionals from across the financial services industry in an informal setting.
Our first event also proved to be extremely timely, with the UK’s Financial Conduct Authority (FCA) having published its second – and final – policy statement only the day before. This latest publication sets out the regulator’s completed rules on key conduct issues, including research, inducements, client categorisation, best execution, the appropriateness test, taping, client assets and perimeter guidance. In addition, it also published a sixth consultation paper, which addresses a small number of residual issues, and finalised a number of ‘near-rules’ from its policy statement in March.
Tackling the issues
But speaking on the night, Lene Hansen of Bips Global warned about the importance of not just trying to put a ‘sticking plaster’ on the needs of the industry when it comes to MiFID II compliance. Instead, she urged businesses to take a holistic approach to meeting the needs of various financial firms and to reach-out more to utilise the skills available in our industry. Yet while the sell side appears mostly prepared for the implementation of MiFID II, buy side firms persist in keeping their heads in the sand, according to Jonathan Cowan from Calypso Technology. Best execution is also a big issue for most market participants, he added.
In fact, the implementation of MiFID II is proving massively disruptive for many on the buy side, TABB Group’s Monica Sommerville explained. She believes that the new rules are having the largest impact on those firms classed as systemic internalisers and that collecting new data will prove to be a challenge. For example, how can firms interface with other systems across different functions in their business? Representing the FCA, Stephen Hanks responded by reassuring attendees that the FCA are taking a pragmatic approach to firms who can demonstrate they have made ‘honest efforts’ to comply with the new legislation. He added that there are certain assumptions participants can make which will demonstrate they are genuinely trying to implement the necessary changes.
However, Hanks warned that while the FCA recognises the challenges faced by the market, it will still require firms to make reasonable efforts to comply. To help them with this, he said the FCA will be hosting a number of roundtables covering specific aspects of the new rules – such as transaction reporting, which it will cover in its Supervision Roundtable on 17 July. Responding to a question from Breige Tinnelly, he concluded that having an effective governance structure and culture in place will greatly aid firms in their implementation of MiFID II. In its policy statement, the FCA also urged firms to continue with their preparations for the application of the new regulation on 3 January 2018. By bringing together the MiFID II community and connecting people from the worlds of compliance, technology, financial services and beyond, AQMetrics hopes to add value to this process and help firms establish how to best prepare for the changes ahead.