ESMA published a speech given by Steven Maijoor, ESMA Chair, this week to the European Commission’s Economic and Monetary Affairs Committee (ECON). The aim of the speech was to provide ECON with a further update on the past and ongoing regulatory work of ESMA in relation to MiFID II.
Mr Maijoor touched upon three topics within MiFID II in particular, which have attracted most attention, namely non-equity transparency, position limits and ancillary activity, but he also took the opportunity to consider the timeline for the implementation of MiFID II.
In his speech, Mr Maijoor discusses the implementation challenges in the run-up to the implementation date for MiFID II, which is 3 January 2017. He confirms that the next technical standards package is already in the pipeline, which, although not as voluminous as the previous set of implementing technical standards, comprises important topics such as position reporting. Mr Maijoor notes that the timing for stakeholders and regulators to implement the rules and build the necessary IT systems is extremely tight, and there are a few areas where the calendar is already unfeasible. He pointed out that these timing issues have been raised with the European Commission, together with the fact that some IT systems will not be ready in January 2017, which will create uncertainty as they are needed for the execution of certain elements of MiFID II. In this regard, Mr Maijoor explains that it has been raised with the European Commission whether this uncertainty would need a legislative response to delay certain parts of MiFID II, mainly related to transparency, transaction and position reporting).
In addition to the challenge of building IT systems within the proposed timeframe, ESMA also has a specific role when it comes to assessing pre-trade transparency waivers and proposals for setting position limits. Mr Maijoor notes that ESMA will have to go through many assessments in the six-month window between the transposition date of MiFID II in July 2016 and its application date of January 2017. He points out that, given the sheer volume of financial instruments covered, it will be extremely resource-intensive for ESMA and national competent authorities to have all these ready in time.
Mr Maijoor says that these implementation projects give just a glimpse of the wide range of issues that will arise during the coming months and that it will be essential to ensure a careful co-ordination between the adoption of the RTS, the national transposition, the delegated acts and the development of the IT systems.
According to an article in Reuters published yesterday, Martin Merlin, Director for Financial Markets at the European Commission, has told ECON that the preliminary technical view was that a delay was needed, "if we want to have a smooth and effective implementation…We will need to decide what the scope and duration for that delay should be…Maybe the simplest and most legally sound approach would be to delay the whole package by one year."