- European Commission gives firms more time to get systems ready
- Hill says delay necessitated by complexity of technical rules
Financial firms will have an additional year to comply with MiFID II, the overhaul of European Union market rules that cover everything from derivatives trading to bond pricing.
The European Commission, the EU’s executive arm, announced the long-awaited delay on Wednesday. The deadline has been moved forward to Jan. 3, 2018, to “take account of exceptional technical implementation challenges faced by regulators and market participants,” the Brussels-based commission said in a statement. The delay is “strictly limited” to allowing technical work to be finished.
The announcement brings clarity to financial market participants who have been uncertain as to the timing or length of a delay since the commission reassessed the implementation date after the European Securities and Markets Authority, the EU markets regulator, said there wasn’t sufficient time for banks and other financial institutions to build necessary data-reporting systems before the original 2017 deadline.
“Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II,” said Jonathan Hill, the EU’s financial-services commissioner. “We will therefore give people another year to prepare properly and make the necessary changes to their systems.”
Meanwhile, one set of implementing rules for MiFID II, known in Brussels as delegated acts, is nearly done. The rules cover contentious issues such as new rules on payment for investment research and will likely come soon, according the financial services chief. “We are pressing ahead with the level II legislation to implement MiFID II and expect to announce those measures shortly,” Hill said.
“A delay until 2018 will provide regulators and market participants much-needed time to develop the systems they need to comply with the requirements of MiFID II,” said Harry Eddis, a financial-regulation partner at Linklaters. “It will also enable regulators and legislators to sort out some of the difficult issues that have arisen as people get stuck into the detail of the legislation. It’s a huge task, and while a 12-month delay will be welcomed, the industry will still face a race against the clock to get everything in place.”