With the compliance deadline for Markets in Financial Instruments Directive II (MiFID II) just six months away, we called on some industry experts to share their views on how implementation is going, the toughest challenges of the regulation, and which workflows need to be prioritised to hit the 3 January 2018 deadline date.
Among the toughest challenges identified by the experts – who joined us on a recent A-Team Group webinar – were best execution reporting, transaction reporting and ensuring transparency. Looking at the data underlying these challenges, an audience poll considering which elements of MiFID II data are proving particularly difficult to source showed 45% of respondents citing reference data, 43% ISINs for OTC derivatives, 39% standard data such as LEI, CFI and MIC codes, and 32% market data.
The webinar – MiFID II: How prepared are we? – was hosted by A-Team editor Sarah Underwood and joined by Gaurav Bansal, MIFID II programme director at Tilney BestInvest Group; Rinesh Patel, head of enterprise and risk, market development at Thomson Reuters; Mark Blakey, chief technology officer at Misato Systems; and Joseph Turso, Vice President at the SmartStream Reference Data Utility (RDU).
An initial audience poll looking at how ready organisations are to meet the obligations of MiFID II, found only 12% of respondents as ready as possible, bearing in mind that a few implementation details have still to be finalised by the European Securities and Markets Authority (ESMA). Some 41% are somewhat ready, 25% just starting, 18% in the planning stage and 3% not ready at all.
Bansal said the key requirements of MiFID II, such as transaction reporting, are well defined and that firms should plan to comply with them on 3 January 2018, although some areas of the regulation, such as details on costs and charges and product governance, may not be complete and reportable on the deadline day.
Looking at the data sourcing challenges of the regulation, Blakey suggested the difficulty is not in finding the necessary data, but in integrating it all to meet requirements. Patel pointed to difficulties caused by data delays when so much data must be collected, normalised and distributed, and said firms want more real-time data to ensure transparency.
While the data management challenges of MiFID II remain significant, the panel suggested the regulation could drive more technology solutions that could make data management more intuitive. Touching on the potential benefits of compliance, Turso said regulation is sometimes needed to improve data quality and consistency, and that MiFID II is a classic case here. Bansal saw no immediate benefits of compliance, but noted that in the longer term, firms will be in a better place as the regulation forces them to make data more accurate, store data more effectively and make workflows more efficient.
Final advice to data practitioners included collaborating across a firm to get MiFID II right, not ripping anything out or building another data warehouse, making sure any solution can handle change, and planning for more MiFID II work in 2018.
Listen to the webinar to find out about:
- Progress on MiFID II
- Outstanding challenges
- Approaches to compliance
- Workflow priorities
- Long-term benefits