The delayed implementation of MiFID II, a key directive that forms part of the European Commission’s response to the financial crisis, is frustrating to some, but will be welcomed by others.
The directive – fully known as the Markets in Financial Instruments Directive II – was due to come into force in January 2017, but on Tuesday the EC accepted that more time may be needed for its implementation due to the large amount of technical work involved.
Uner Nabi, executive director in the financial services risk practice at EY, a business consultancy, in London, says: “The renewed uncertainty over the timing of the MiFID II implementation is frustrating, but in reality does not come as a huge surprise.”
He says the industry “more than ever now” needs clarity around the level and nature of the delay.
Mario Mantrisi, senior adviser to the chief executive at Kneip, a Luxembourg-based data and reporting service provider, says the delay is not a surprise given the ample scope of MiFID II – but he warns that delaying MiFID II could also hold up the EU’s major reform of retail investment products under the ‘Priips’ initiative.
“The [delay] will undoubtedly afford the industry time to plan changes and mobilise themselves to implement them. However, it does give rise to an interesting question: as Priips goes live on December 31, 2016, and Priips is supposed to be MiFID II compliant, in that context, will this delay also cause a delay in Priips’ implementation?”
Priips, which stands for packaged retail and insurance-based investment products, aims to make product disclosure and selling processes around these products more consistent.
The delay of MiFID II will almost certainly be welcomed by the European Fund and Asset Management Association (Efama), which has called for implementation to be postponed, partly for fears the directive would be enforced unevenly between EU countries.
Efama even urged Brussels to consider implementing MiFID II as a regulation rather than a directive.
The original MiFID came into force in 2007 and forms the European framework for the shares, bonds and funds investment markets, but MiFID II aims to further improve financial markets in light of the financial crisis, and to improve investor protection.
It covers areas including how adviser fees are paid, and how fund managers pay brokers for research.
©2015 funds europe
