EU Financial-Market Rules Delay Isn't a Done Deal, Lawmaker Saysby
Changing MiFID II start date would need legislature's approval
EU Parliament's Ferber said substance of rules must be diluted
The postponement of European Union financial-market rules known as MiFID II isn’t “set in stone,” and can’t go ahead without the endorsement of a skeptical parliament, according to EU lawmaker Markus Ferber.
The European Commission, the EU’s executive arm, said on Nov. 10 that “a delay might be necessary” after the European Securities and Markets Authority warned that “it won’t be possible to implement certain aspects” of the legislation by January 2017, when the rules are scheduled to take effect.
“The European Parliament’s negotiating team will meet in the upcoming days to discuss the way forward,” Ferber said. Discussion of the matter by lawmakers “showed that there is little appetite to embrace the commission’s proposal in its entirety,” he said. “The scope as well as the duration of the delay is still up for debate.”
The EU’s revamp of its market legislation, approved in 2014, is a centerpiece of its effort to shore up regulation following the financial crisis of 2008. The new rules would affect nearly every financial firm operating in the 28-nation bloc, from giants like Deutsche Bank AG and Goldman Sachs Group Inc. to small hedge funds. Industry groups have pushed for a delay, arguing that companies needed more time to adapt to the sweeping changes, many of which entail extensive technical refitting.
Since the start date for the new market rules is set in law, changing it would require a legislative amendment that both the European Parliament and the Council of the European Union, which represents national governments, would have to approve.
Ferber, the parliament’s lead lawmaker on the file, said any delay should be made only to allow regulators and financial companies more time to implement the final rules. Their substance must remain intact, he said.
“For that purpose the implementing legislation needs to be finished as soon as possible to achieve a sufficient degree of regulatory certainty,” he said. “Amendments with regards to the timeline must not dilute the substance of the content.”
Steven Maijoor, the chair of ESMA, said the time required for banks and other financial institutions to comply with the complex rules is too tight, especially since proposed regulatory technical standards needed to make the them work in practice still aren’t completed.
“They’re saying the IT systems aren’t where they need to be, but it’s not clear the slippage comes from that,” said Damian Carolan, a partner at law firm Allen & Overy in London. “I hope the delay doesn’t come from the need to finalize the rules. There can’t be another delay after this. Whatever new date is set must be achievable.”
Ferber said that the implementing standards need to be finished as quickly as possible regardless of whether the start date is pushed back.
“The biggest danger” of a delay “is that we are losing momentum if we push the entry into force too far into the future,” he said. “If market participants just lean back and wait, we might end up having the same discussion in a year’s time.”