OPINION: Waiting for MiFID II

Terry Flanagan

This week Aberdeen Asset Management compared waiting for the US Federal Reserve to raise interest rates to Samuel Beckett’s Waiting for Godot.

In the renowned play Vladimir and Estragon wait for Godot, who never arrives. The financial industry may be feeling the same existential angst as they wait for the final MiFID II rules, which will cover financial services in Europe.

This month Steven Maijoor, chair of the European Securities and Markets Authority, said the regulator and the European Commission have agreed to conduct an early legal review of the draft technical standards for MiFID II. Maijoor said this will allow a more efficient endorsement process as the Commission can inform Esma of any legal concerns before the final rules are adopted and reduce the risk of a potentially lengthy re-approval process.

However by moving the legal review forward, there will be a three-month delay of the publication of draft MiFID II technical standards from July to September 2015.

Christian Voigt, senior regulatory adviser at technology provider Fidessa, posted on a blog that although it is better for Esma and the Commission to avoid a game of legal ping pong, it is “rather bold” for Esma not to delay MiFID II implementation.

His colleague at Fidessa, Steve Grob posted that it is hard to understand how the MiFID II implementation date won’t change as firms work to a tightly planned schedule to produce software that meets regulatory objectives for their customers. He wrote: “I fear, therefore, that the venerable Dr Voigt is right and that our industry is being served an unpalatable appetizer of unintended consequences before we have even taken our seats at the table.”

Rushing to meet the implementation deadline with substandard systems and processes will surely not help anyone. The debacle over the introduction of trade reporting in Europe has led to the production of lots of data that is useless to both the regulators and the industry. It would be a travesty if MiFID II produced the same results.

In the fixed income market Aberdeen Asset Management said Godot may not be far away as wage growth continues to accelerate and the Fed could soon meet its stated inflation target of 2% over the medium term which it needs to raise rates. Those waiting for MiFID II may find that Godot’s arrival is still only a distant possibility.

MiFID III anyone?

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