With the announcement of a one year delay to the introduction of the revised Markets in Financial Instruments Directive (MiFID II), coupled with the fact that the regulation is yet to be finalised, some firms are yet to start thinking of the impact of MiFID II on their organisation.
MiFID II is now due to take effect on the delayed date of 3rd January 2018, resulting in some organisations becoming somewhat complacent about starting their MiFID II projects, believing there’s plenty of time to upgrade their IT systems, tighten existing procedures and write a few new policy documents.
The problem is that MiFID II is not simply an upgrade or top-up of the current MiFID regulation and includes new regulations well beyond that of MiFID, covering more financial instruments, more asset classes and additional investor protection rules.
MiFID II is likely to impact your business and operating models.
Costs, together with the complexity of meeting some aspects of the regulation, will result in some firms changing the types of service and products that they offer their clients and/or their operating models.
In addition, investment firms’ procedures and policies will need to be either revised or new ones introduced.
In particular, organisations will need to ensure that their procedures and policies are sufficiently robust to adhere to more comprehensive investor protect rules. Some topics that you should be considering include the following:
- Will your firm be prepared to continue offering advisory services (independent or non-independent)?
- Firms from outside the European Economic area with a registered branch operating in the EEa may question their continued operation due the cost and complexity of implementing MiFID II.
- Will your organisation continue to delegate transaction reporting to other firms given the requirement to disclose client details?
- Have you considered how your organisation will monitor the suitability of products offered to clients?
- How do we ensure that we record all clients communications that may lead to a transaction?