What has happened?
The European Commission has at last confirmed that the implementation date for the package of measures known as MiFID II has been pushed back 12-months. Investment firms now have until 3 January 2018 to implement the changes to their processes, procedures and documents. The main reason for the delay is the recognition of the amount of work needed for regulators to get ready to receive the large volume of complex trading data required to be generated by firms under MiFID II.
This is not a very surprising announcement and the likelihood of a 12-month delay had been trailed in November. However, the legislation effecting the delay has now been published. A key point is that the legislation makes it clear that this is a one-off delay of 12-months. There is pressure to ensure that MiFID II does not take on the status of the Solvency II measures where the implementation deadlines were postponed on a number of occasions and implementation efforts ran out of steam because of ever changing deadlines.
The entire package of MiFID II measures will be delayed – initially there was a suggestion that there could be a phased introduction with some provisions still being required to be implemented by January 2017. The proposed delaying legislation published recently by the European Commission confirms that this is no longer in contemplation and that the delay will apply to all MiFID II legislation.
What can we expect next?
We are still waiting for the publication of the implementing acts – now expected to be released in late Q1 2016. Although many of the technical standards have already been published, these outstanding measures have much of the detail on the core areas, including product governance, conduct of business and inducements. Without these detailed provisions, firms are struggling to understand the full extent of the changes they need to implement.
Given the continuing delay in the release of those draft rules, the FCA decided to split its consultation on changes to its rules into two parts, with the first being released in December 2015. The second part, which will set out the changes of greatest relevance to most firms, will not be available until the FCA has had an opportunity to consider the implementing acts.
What does this mean for me?
Perhaps the better question here is “what does this not mean for me”! Although there has been a slight breathing space provided, firms subject to MiFID II will still have a lot of work that they can be getting on with already to ensure that they are ready for the delayed implementation date.
The FCA has previously suggested that it will be understanding of firms who are not able to comply in full with the MiFID II requirements by the implementation date. However, it will only be sympathetic of firms who have made a genuine effort to become compliant. It is important, therefore, not to use this 12-month delay as an excuse to ease off on implementation plans.