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FinTech Trends Newsletter Week 11th December – 15th December 2017
Ready or not, MiFID II is coming. Are you ready ?
With just 19 days to go before the implementation of the MiFID II (Markets in Financial Instruments Directive II) on January 3rd 2018, how close is the financial industry to being ready for the biggest change in financial markets infrastructure for decades?
It is difficult to judge the level of the industry’s readiness for the implementation of MiFID II as it depends largely on the size of a firm, its business activities, as well as its location and budgets.
From a market structure perspective, much of the focus has been on commission unbundling, transaction reporting and trade identifiers, as some of these issues – particularly around the latter point – are still bubbling away. Furthermore, the challenge of being ready for call recording and data storage hasn’t gone a miss, as any organisation providing financial services to clients linked to ‘financial instruments’ have to record and store all communications intended to lead to a transaction. Unlike the current FCA regulations, which are specific to those directly involved in financial trading, with MiFID II any organisation that’s even giving advice that may lead to a trade or investment will need to comply with this rule. This has had its challenges for all sizes of firms whether they are in their own office or in a serviced office, which has caused problems for smaller firms who use managed office services, including telephones, of the landlord or office provider. This is something that Storm IT Financial can help firms with now.
MiFID is a set of sweeping reforms for the financial industry designed to prevent history from repeating itself in the same way as 2008’s financial crisis, bringing changes to many areas relating to the conduct of business, including far more robust rules around the recording and storing of conversations. With MiFID II, recordings must be stored for a minimum of 5 years from the date the record is created, and if requested by the competent authority for up to 7 years.
The Directive states “All records must be kept in a ‘durable medium’ so that they can be effectively monitored for compliance, and in a way, that allows them to be replayed or copied and ensures the original record cannot be deleted or altered.”
Recordings must be stored in a way that makes them accessible and readily available to the FCA on request. And organisations are required to ensure the quality, accuracy and completeness of records. Storm IT Financials MiFID II Call Recording & Data Compliant Solutions tick’s all these box’s & more, developed specifically for MiFID II & GDPR purposes, with immediate deployment.
There is a wide variation in readiness for MiFID II depending on the type of market participant. In some cases, this variation is a result of size – for example, many of the larger buy-side firms are advanced in their readiness for this rule change, whereas the smaller fund managers and Hedge funds that may not have the same operational resources are tending to lag.
So, what happens to those organisations that – despite their best efforts – are not ready by 3rd January or who experience teething problems on that date? By all accounts the regulators have said both publicly and privately those firms who can demonstrate that they have done all in their power to comply with the new MiFID II rules, leniency will be granted.
However, for those who cannot demonstrate such efforts, the penalties and fines will be forthcoming.
MiFID II, with its sweeping rule changes, has been termed as a big bang for financial markets – therefore it is not surprising that market participants are finding preparations challenging. That said, the objectives of MiFID II, such as mitigating risk in financial markets and increasing transparency for end investors, are admirable goals which should go a long way in restoring investor confidence in financial markets after the global crisis in 2008. As a result, as market participants strive to be ready for the 3rd January deadline, it should be remembered that while preparations may be onerous in the short-term, in the long term they will be worth it.
MiFID II is being introduced on the 3rd January 2018 will have consequences for the way in which your firm and your IT managed services provider manages its IT systems. Understanding MiFID II is the first step towards putting in place the necessary systems and processes to meet the new requirements. Contact Storm IT Financial for help and guidance about MiFID II & GDPR and it’s effects on your firm, our MiFID II Call Recording & Data Compliant Solutions and how you can align your IT systems to the directive’s requirements.
Storm IT Financial FinTech News & Trends picks: Week 11th December – 15th December 2017
FCA urges asset managers to report MiFID implementation struggles
UK regulator has ‘least patience’ with fund houses that fail to disclose problems:
https://www.ft.com/content/3b67370a-da99-11e7-a039-c64b1c09b482
Banks Leading the Industry into a New Regulatory Era as MiFID II Looms
As MiFID II is fast approaching, financial institutions are gearing up for the upcoming changes:
EEX approves changes to rules & regulations regarding MiFID II and introduction of new products
The Exchange Council European Energy Exchange (EEX) approves change to ensure the Exchange is fully compliant for MiFID II:
https://www.hedgeweek.com/2017/12/14/259379/eex-approves-changes-rules-regulations-regarding-mifid-ii-and-introduction-new
Privacy panic: EU data protection laws
New regulations governing data protection will hand power back to consumers but could result in bank branches closing & retailers suffering:
https://www.standard.co.uk/business/privacy-panic-the-next-ppi-scandal-a3718641.html
Two US regulators warn on crypto dangers as ethereum hits record high
Surging cryptocurrencies prompted two US financial regulators to weigh into the debate and warn about the risks to investors:
Most EU states have not yet adopted MIFID 2, as start date looms
Most European Union countries have not yet adopted revised financial markets rules known as MIFID II:
FCA fines rise tenfold this year
The total value of the fines meted out by the Financial Conduct Authority (FCA) increased tenfold year-on-year in 2017:
Almost half of financial services executives ignorant of new EU MiFID II rules
Nearly 40 per cent of British financial companies are unaware whether they comply with MiFID rules:
MiFID II: What you need to know before 3 January
Reuters: With the MiFID II compliance deadline less than a month away, are financial institutions ready?:
Judge dismisses New York regulator’s fintech charter lawsuit
US judge has dismisses lawsuit seeking to block plans to grant fintech charters:
Schroders launches asset management chatbot in Singapore
Schroders Singapore launches an online chatbot operating through Facebook to answer client queries…:
Understanding the Hybrid Advisor Model
As advisors begin to embrace the digital wave, the tech-enabled hybrid model can take on several variations:
