MiFID II,the biggest shake-up in financial regulation for a decade may have arrived, but for asset managers and brokers across Europe the work continues as the complexity and costs of full compliance begin to emerge.
Across Europe, bank back offices have been a hive of activity over the normally dull festive period as firms scrambled to be ready by the 3 January deadline for the introduction of MiFID II, a sprawling revision to financial market rules that runs to 7000 pages and covers everything from the costs of analyst research to the reporting of more detailed information about trade transactions.
While TP Icap this morning boasted that it is now substantially ready for MiFID II, the same could not be said for some of Europe's major trading venues, including Germany's Eurex, ICE Futures Europe and the London Metal Exchange which have each been given a last-minute reprieve by financial market regulators over the introduction of non-discriminatory access requirements for trading venues. With uncertainty about Britain's post-Brexit future and relationship with overseas market operators clouding the issues, the clearing houses have been given an extra 30 months to comply with the rules. Similar deadline extensions are also expected to be granted to other major clearers across the continent and in the UK.
Likewise, the European Securities and Market Authority has already moved to give trading firms an extra six months to meet new provisions for appending Legal Entity Identifiers to client trading activity.
Rules relating to the unbundling of research from trading costs for asset managers are also causing headaches, with buy-side firms still uncertain about how the regulations will be interpreted by market authorities.
Some member states are additionally having trouble transposing the new rules into national law, thus creating overlapping deadlines
Industry consultancy Optimas estimates that Europe's biggest banks will ultimately spend EUR40 million on achieving full compliance, with the total industry price tag running to as much as EUR2.5 billion.
Reflecting the scale of the effort involved, trading software house Fidessa estimates that it devoted 10,000 man days in 2017 to read, interpret, reinterpret, code, test and implement all of the new provisions in preparation for the 3 January switchover.
"Who knows what the total industry bill is," says the firm's director of group strategy Steve Grob, billing the regulation as a "punishment tax" levied on the industry over past financial market excesses.
For many, the MiFID II deadline is just the first staging post on a longer journey. EY's MiFID II expert Uner Nabi, says: "Firms may be keen to refocus resource on other priorities as soon as possible, but work on Mifid II will have to continue with adequate resourcing for around six months into 2018."
Now, where did we put our GDPR and PSD2 manuals?