The volume of activity along the current regulatory pipeline remains high, but it is now concentrated in two distinct parts of the pipeline. Firms need to keep an eye on and seek to influence the evolving regulatory horizon, even though resources are stretched in implementing swathes of new rules.
One very large bulge in the pipeline is detailed rule-making and issuing of guidelines by the European Supervisory Authorities (ESAs), which underpin the many new Level 1 Directives and Regulations. MiFID II is giving rise to a substantial proportion of that work. Coupled with national regulators’ domestic implementation programmes, this alone is requiring major resource spend for banks, investment managers and other investment firms, including - for the first time – commodity firms.
Not only is this bulge in the pipeline close and very large, it is not all flowing smoothly. After much political speculation, the Commission has formally announced a delay of one year to the implementation deadline of the ‘PRIIP KID’, which brings it into line with the revised deadline for MiFID II of January 2018. This is welcome, but unfortunately some of the preparatory work already undertaken may need to be re-done. It remains unclear whether the resulting disclosures in the KID will be meaningful for retail investors.
The second bulge of regulatory activity sits further out on the regulatory horizon. The Financial Stability Board and international regulatory bodies continue to debate the question of systemic risk in the insurance and investment management sectors and what additional rules or supervisory focus might be justified.
Under the banner of Capital Markets Union, the Commission is indicating that it means business and is working on a number of initiatives. This month we report on the latest discussions between officials and industry on the proposal for a pan-EU Personal Pension Product.
It is not only new rules and policy proposals that firms need to monitor closely. The Commission, the ESAs and national regulators are setting out their monitoring, investigative and supervisory priorities for the coming year. The ESAs share some common themes: supervisory convergence, data collation and analysis, and consumer protection. Also, the internal governance of firms and a focus on costs and charges remains high.