EU mulls MiFID II delay

It might be necessary to delay the MiFID II regulation until January 2018, Reuters has quoted a European Commission (EC) official as saying.

The ‘simplest and most legally sound approach would be to delay the whole package by one year,’ Martin Merlin, a senior EC official, told the European Parliament’s economic affairs committee on Tuesday, according to the news agency.

The wide-reaching regulation is set to come into force on January 3, 2017 but, separately from Merlin’s comments, Reuters adds that Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), has also warned the committee that a delay to at least parts of the reform may be necessary to allow banks and brokers time to update their IT systems.

‘The timing for stakeholders and regulators alike to implement the rule and build the necessary IT systems is extremely tight,’ Maijoor is quoted as saying by the Financial Times. ‘There are areas where the calendar is already unfeasible.’

While critics of the ambitious regulation – a response to the 2008 financial crisis that takes in everything from corporate access and research to dark pools and bond pricing – might celebrate any potential delay, Anneliese Dodds, a UK member of the European Parliament, warns that moving the implementation date could leave markets vulnerable.

Dodds said on Tuesday that a delay carried ‘considerable risks’ to the regulation, according to the FT. ‘If the period of postponement is too long, the momentum will be lost,’ the paper quotes her as saying. Others argue that only parts of the legislation should be delayed.

The FT adds that the EC is ‘adamant the delay will not water down the substance of MiFID II’, designed to be a ‘single rule book’ for the European markets.

A draft version of MiFID II was proposed in October 2011. More than two years of negotiations followed but a deal on the final version of the law was approved by national governments and the EU parliament in 2014, with a start date of January 2017.