MiFID II: The Final Countdown

MiFID II has been a long time in the making, and the repeated delays may have led some to think that 12 months is plenty of time to get ready. However, this is a far-reaching directive with implications across trading, transaction reporting and client services, encompassing IT and HR systems. Firms need to get on the front foot now to ensure they can meet the requirements of the directive this time next year.

Fail to plan, plan to fail
Anyone relying on Brexit to create further delay, or to be repealed, should think again. While the Brexit timelines are not yet confirmed, MiFID II will pass into UK law this summer and will come into effect in January 2018. Even after it formally withdraws from the European Union, the UK is expected to follow the MiFID II regime.

So now is crunch time. There are a number of obvious challenges, as well as some that may have slipped under the radar. Some business changes may prove relatively straightforward, such as creating formal documentation for existing processes, but others could well involve sweeping changes to how managers run their business, interact with counterparties and even how the industry itself is structured.

Reporting obligations
In line with the overall goal of increasing transparency and improving market abuse detection, MiFID II will usher in sweeping changes around transaction reporting. Hedge fund managers have typically relied on the sell-side to fulfil both sides of the transaction reporting obligation on their behalf.