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Getting to grips with MiFID II
By Michael Thomas
MiFID II has introduced significant changes to the way in which investment business will be undertaken in the EU. It will affect wholesale investment activity and retail investment activity in multiple ways, including through the introduction of more transparency and through an increased focus on investor protection arrangements.
Banks will have already spent much of 2017 getting ready for MiFID II implementation. However, now that it is here, there are a number of issues that they will still need to grapple with.
Banks will need to ensure that their MiFID II processes are operating in a compliant manner. MiFID II is a very detailed regulation. There is significant scope for varying interpretations in a number of areas. We should see clarifications from the regulators over time, but in the meantime, banks will need to come to sensible decisions when faced with areas of ambiguity.
Banks will also need to deal with counterparties or clients who may not themselves have fully implemented MiFID II. The degree of MiFID II compliance across the industry is varied. Some firms have either not been able to get ready in time, or are only just waking up to the fact that MiFID II might affect them. Dealing with noncompliant counterparties will be a challenge for banks in 2018.
Legal teams should ensure that they understand to what extent there may be more work to do to get their businesses MiFID II compliant. The FCA has indicated that it will take a proportionate approach to MiFID II compliance in the initial stages of 2018, but to do nothing will not be looked at favourably.
