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Regulators To Review MiFID II Implementation

Traders Magazine Online News, January 18, 2019

Shanny Basar

Supervisors will focus on examining the implementation of existing regulation, especially MiFID II, after an informal grace period last year according to the Deloitte Centre for Regulatory Strategy.

The consultancy said in its Regulatory Outlook for 2019 that this year is important as it marks the the first calendar year following implementation of several major pieces of regulation.

“After an informal “grace period” for firms through 2018, supervisors will scrutinise the implementation of PRIIPs, MiFID II, PSD2, IDD and GDPR,” added Deloitte. “MiFID II is likely to be at the vanguard of post-implementation scrutiny.”

MiFID II went live in the European Union in January 2018.

The report continued that most supervisors will prioritise transaction reporting, payment for research and inducements when reviewing how MiFID II has been implemented. In addition, they will review how firms use the increased data being reported under MiFID II to achieve best execution, despite issues with the data.


MiFID II aimed to increase transparency across by increasing both pre- and post-trade reporting and extending these requirements to new asset classes, including fixed income. Although the increased reporting has been in place for a year, Deloitte noted that market participants have not realised the full benefits as a consolidated tape provider has not emerged.

However, MiFID II gives the European Securities and Markets Authority the ability to appoint a consolidated tape provider under certain conditions.

Deloitte said: “We expect this work to kick-off in 2019. Second, there are concerns about the high costs and poor availability of market data. We expect Esma to address this in 2019.”

The issues with MiFID II data were also highlighted in a survey by the International Capital Market Association last year. Nearly all, 86%, of respondents, said they found it ‘difficult’ or ‘very difficult’ to access pre- and post-trade data. In addition nearly three quarters, 73%, said less than 10% of the available data is ‘usable’.

Martin Scheck, chief executive of ICMA, said in a statement at the time: “Despite the resource commitment to meet the obligations of MiFID II our members, both buy and sell-side, are not yet seeing the benefits of this regulation although they do understand that it will take time for the many challenges to be addressed and for benefits to accrue. Data quality and accessibility were cited as particular concerns.”

The association said that although this will improve over time, the regulators “missed an opportunity” to provide a utility-based consolidated tape for fixed income.

Best execution

MiFID II also requires annual publication of best execution reports but the ICMA survey found these were expensive to produce and barely used. Nearly all, 95%, of firms said the best execution data reporting requirements, under RTS 27 and 28, are “challenging, time and resource draining, and of little or no value.”

Despite these results, Deloitte expects supervisors to look at how firms are using the increased MiFID II data, particularly in relation to fixed income. The consultancy also said authorities will scrutinise the next round of top five execution venue (RTS 28) reports due in April this year.

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