As the data publishing season for best execution begins, it is timely to look at what is required, and what will be required going forward.
In my last blog The week that was the MiFID II deadline I highlighted the issue with LEI’s. This time it seems it is the turn of ISINs that are causing some turbulence below the surface of what otherwise has been a great industry effort to get the good ship (MiFID II) launched and implemented without any sharp squalls driving us onto the rocks.
T’was the night before Christmas, when all through the bank,
Treasury Managers were wondering who they should thank,
For the upcoming challenges they were due to face,
And new regulation they have to embrace.
Halloween got me thinking as to what demons the European markets might expect on a spooky night like tonight. What could come knocking at our doors and will they be a trick or a treat?
MiFID II and MiFIR in the foreign exchange world have generated much confusion. It feels like the regulations are shoehorning the FX market into regulations that are not ideal for the purpose.
“MiFID II and MiFIR will change the way banks around the world do business —particularly with respect to the scope of data, communications formats and records that must be maintained.” -Bloomberg
Responding efficiently to the dramatic changes that MiFID II will bring in January 2018 is key to ensuring your organisation continues to succeed and remains profitable. As a bank or branch/subsidiary regulated by a European regulatory authority and operating in the EU, your bank is subject to MiFID II in general terms. MiFID II covers nearly all instruments (e.g. including Forward FX) except for most Spot FX. The confusion regarding the definition and whether spot FX is in or out has been clarified to some extent and relies mainly on the T+2 (smaller currencies up to T+5) and “physically settled” definitions.
It is heartening to see at last some good news on the regulatory front in Europe. It is now widely expected that the European Parliament and Commission will move to postpone the entry in force of the PRIIPs Regulation by 12 months. This will bring the timing in line with MiFID II. If all goes well the “cunning plan” will move the date of application to 31 December 2017.
Continuing on from our last blog which highlighted the background to the emergence of the Building Society market, we are looking in more detail at the regulatory journey the sector has been on. In our next blog we will be taking a more detailed view on how regulation is impacting the market now and in the future. We will look at how the current situation and future impacts on the sector.
After the draft of MiFID II technical standards in December 2014, financial institutions began to get a flavour of the profound changes ahead. Scandals were propelling the drive to enact legislation that would boost market integrity through the introduction of more transparent markets. This transparency, unless adequately planned for, can require significant changes to a vast panoply of IT systems.