The main objective of MiFID II is to catch up on new developments such as new trading venues, new financial products and new technological developments like automated trading. The revision consists of a directive and a regulation, and aims at making financial markets more efficient, resilient and transparent, and strengthen the protection given to investors. This has resulted in the introduction of a new type of trading venue, new types of service providers and strengthened supervisory powers to regulators.
In February 2015, the EC recognized the exceptional technical implementation challenges faced by regulators and market participants and extended the deadline for compliance by one year to 3 January 2018.
Since the initiation of a review of MiFID I by the EC in 201O, more than 10.000 pages of regulatory text has been published. The sheer volume makes MiFID II a challenging legislation to be understood and implemented with implications for both the business and operating model of the market participants. The requirements are so extensive that we believe governance, organization, policies and procedures, processes, data and related infrastructure would be impacted extensively. Furthermore, changes to transparency and the market infrastructure such as the requirement to trade on exchanges may well impact liquidity of specific products. KPMG believes, adequate management of the published details is essential to assure MiFID II compliance by January 2018.
To assist the market, KPMG has established a concise MiFID II framework that allows clients to phase in the necessary changes.
Author: Rob Voster