A number of question marks remain surrounding the detail and full impact of MiFID II. These are causing significant anxiety amongst the trading community as we edge further towards the late 2016 implementation date. The practical reality of the post-MiFID trading environment, and the expected higher trading costs associated with it, remain somewhat of a grey area.
Nonetheless, with firms not expected to have implemented the new measures until late 2016, there is still time for these concerns to be addressed.
Regulators are playing a fundamental role in the post-2008 crisis world. New regulations –MiFID II in particular – are designed to provide a more transparent and fairer market; a market with greater stability and without the inherent structural imbalances that can result in higher risk and volatility, or those that are susceptible to wilful abuse. These aims are intended to benefit all market participants in the long run.
So where is the middle ground between the regulated and regulator?
The clock is ticking for those on both sides of the impending legislation, with feedback on the likely impacts of those policy options outlined in the regulation’s discussion paper currently being collated. The way forward must centre on mutual engagement by both the regulators and those whom they regulate.
It is the role of technology providers, integrators and their end users to have the right solutions in place in order to help financial institutions comply with regulation. It is the role of the regulators to ensure that the regulations - from the off - are firm, well-defined and clearly focused on the aims of stability and transparency. Crucially, the incoming regulations must be introduced with the buy-in and involvement of the whole financial markets’ community.
While the regulator is responsible for the actual enforcement of the rules it lays down, it is down to all participants in the financial markets to interrogate, explore and ask tough questions of technology providers and regulators alike. This will enable intangible regulations to become practical rules, grounded in the real world, that guide the way we work and trade. Only then can we really start to create a global culture of compliance across the financial markets.
In the meantime there remains a gap between knowing that MiFID II is coming, and knowing the steps that need to be taken across an enterprise in order to be compliant. This gap is evident in the tension between the rule-setters and those participants who will have to continue with ‘business as usual’ when MiFID II arrives. This can be seen at every intersection point between financial markets participants and the technology they use to achieve their business aims.
Helping market participants to prepare for the post-MiFID II world, through engaging in constructive dialogue, will settle concerns and ease the implementation process. In response, firms need to be receptive, engaged and willing to be involved in those conversations. The duty of engaging in positive, constructive and frank discussions places obligations on all stakeholders in the process. We cannot afford to be sceptical or to disengage with each other; the success or failure of the post-MiFID II world will affect all of us in equal measure.