MiFID II delayed
The European Commission has put markets out of their suffering by finally confirming a one year extension to the entry into application of the revised Markets in Financial Instruments Directive, or MiFID II. The extension has been made to overcome technical implementation challenges faced by both regulators and market participants. The new deadline is 3 January 2018.
The reason for the extension lies in the complex technical infrastructure that needs to be set up for the MiFID II package to work effectively. The European Securities and Markets Authority (ESMA), a pan-European regulatory body, has to collect data from about 300 trading venues on about 15 million financial instruments. To achieve this result, ESMA must work closely with national competent authorities and the trading venues themselves. However, the European Commission was informed by ESMA that neither competent authorities, nor market participants, would have the necessary systems ready by 3 January 2017, the date by which the MiFID II package was initially scheduled to become operational. In light of these exceptional circumstances and in order to avoid legal uncertainty and potential market disruption, an extension was deemed necessary.
Jonathan Hill, commissioner for Financial Services, Financial Stability and Capital Markets Union said, “Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II. We will therefore give people another year to prepare properly and make the necessary changes to their systems. Meanwhile, we are pressing ahead with the level II legislation to implement MiFID II and expect to announce those measures shortly.”
This extension will not have an impact on the timeline for adoption of the ‘level II’ implementing measures under MiFID II/MiFIR. The EC will proceed with their adoption irrespective of the new date of entry into application of MiFID II. This will provide legal certainty for the new provisions.
A period of 30 months between the adoption and the entry of application of MiFID II had already been foreseen to take account of the very high level of complexity of the package. The extension of the deadline is strictly limited to what is necessary to allow the technical implementation work to be finalised.
Reported by Dan Barnes