There are high expectations about MiFID 2 (Market in Financial Instruments Directive), that is considered one of the most impacting European directive for financial intermediaries, as it considerably extends the range of former directive MiFID 1.
Unfortunately, its enforcement date has become uncertain and, in the next future, any implementation plan shall have to be flexible at some degree, between contrasting messages coming from the European Securities and Markets Authority (ESMA) and other market players.
Been there, done that
This is in fact what Cian O’Braonain, director of the regulatory reporting practice at consultancy and technology provider Sapient Global Markets, told Markets Media about a possible delay of MiFID 2 to 2018:
There were similar discussions that the trade reporting requirements under Emir would be delayed but this did not happen and the industry had just three months to get ready which hurt everyone. However this time it is Esma that is asking for the delay rather than the industry.
The situation is different today, then, but the past could somewhat repeat itself: ESMA released a long internal note on last October 2nd, Note on MiFID/MiFIR Implementation: Delays in the Go-live Date of Certain MiFID Provisions, in which the organization examines various alternative to eventually show a strong preference for a solution that is similar to what happened time ago for MiFID 1: postponing for a few months the application date of some articles, where few months points towards January 2018, for technical reasons among others:
In the course of the last couple of months, it has become evident for ESMA and NCAs that it will not be feasible to have those [financial services management] systems ready for 3 January 2017. Market participants, who will need to feed into those systems, are facing similar implementation challenges.
EC could enforce 2017 for MiFID 2
ESMA goes a long way to explain every reason for the delay, but this does not guarantee that the European Commission will give it an OK. This is the opinion of Christian Voigt from Fidessa:
Most importantly, it is not ESMA that can decide on a delay, but the European Commission (EC). Even if Steven Maijoor, ESMA’s Chair, has concerns around the “unfeasible” MiFID II calendar, the EC might not agree.
If the European Commission refused to approve the delay, any scenario becomes possible, included a rush to be ready for 2017 even if it’s not actually possible from either a technical and bureaucratic standpoint.
What to do, then, when you have to actually implement a new and important European directive? Sprint anyway and risk to burn precious resources without a good reason, or work according to a delayed schedule with the risk to get a bad surprise from the European Commission? Voigt has no doubt:
So while delaying MiFID II go-live is an important discussion to be had, implementation teams will nonetheless have to keep the pedal to the metal and push ahead.
We will be on time for MiFID 2—whenever it will occur.
We agree. We will be ready for MiFID 2, whenever it goes on effect. And we’re already working with our customers to ensure the smoothest of transitions to the new directive.