Six months ago today, MiFID II started to apply, on the 3rd January 2018. The “go live” day was met with much anticipation in the energy and commodities world (see here), with several sets of rules applying, such as position limits and the ancillary activity test. The wider financial services world had a great deal to implement for MiFID II, and the result are still ongoing, with several developments since our last post (see here), most of which relate to the wider financial services world. Today also sees the start of the requirement that Investment Firms report all trades with Legal Entity Identifiers (LEIs), (see here).
It is felt by ESMA, that while some issues persist, overall MiFID II has been successful. This speech given recently by Steven Maijoor, chair of ESMA, gives such a sentiment, and lists areas that are still of concern, such as data quality, systematic internalisers and others.
This article on the Bloomberg web site discusses how Investment Firms in Germany are unhappy at several of the client protection rules, including those around record keeping, cost disclosure and call recording. Firms are planning to lobby BaFin and ESMA for rule changes, although these are unlikely for some time.
The ability to comply with the growing web of regulation has been an issue for many. This article on the New Europe web site by Daniel Schlaepfer looks at how the web of regulations have unintended consequences, such as more difficult market entry. This issue affects not only financial firms, but also non financial firms, including in energy and commodities, whether based in Europe or elsewhere. Indeed, this article on the Financial News web site looks at how some rules, such as the research unbundling rules, are likely to spread to the US.
Most in the sector and the wider financial services world are still seeing the rules “bed down”. We expect more activity in the coming months. Given that many previously enacted rules are now evolving, it is becoming increasingly hard to keep up, in this era of “making the rules work”.