The main purpose of the MiFID II rules is to increase the protection of banking clients beyond MiFID I and to increase the transparency with respect to financial products and charges.
The revised Markets in Financial Instruments Directive (MiFID II) published on 12 June 2014 will largely enter into force begin 2018. Some deadlines already apply to 2017, but it is expected that the National Competent Authorities (NCA’s like FSMA) will intensify controls on compliance with the European Securities and Markets Authority (ESMA) as of 2018.
The challenges for successful implementation and compliance to the extended legislation are complex and budget consuming due to the multiple impacts on almost all departments of a financial institution. On the one hand the new requirements impose the business side to be creative in adhering to the directive in combination with maximizing commercial opportunity and sales support. On the other hand compliance and legal departments oversee the correct implement in order to pass future National regulatory inspections.
All these changes heavily impact the IT departments and have a high direct cost in terms of resources next to a considerable opportunity cost given long implementation times. Given the considerable room for interpretation of the MiFID II directive, it is key to properly manage the MiFID projects to ensure that program management can effectively identify potential misalignment between project assumptions and deliverables. Efficient communication between project managers and (transversal) analysts is highly important to reach a coherent roadmap.
Regardless the partial delay on the applicability of MiFID II towards 2018 it will remain highly challenging to implement both system and process changes before the deadline while respecting the demands of all stakeholders involved. A though trough change management is inevitable to ensure smooth implementation and transition for both Sales and Back-end operations.