MiFID II: The debate is over, now is the time for action – Bobsguide article

On 29th June, the FIX Trading Community held its summer London regional event kindly hosted by BNP Paribas, bringing together market participants to debate hot topics affecting the industry. And of course, there is nothing more pressing at the moment than the looming MiFID II deadline.

The evening started off with an update from some of the FIX MiFID II working groups, including the Best Execution, Commission Unbundling, MiFID Order Data & Record Keeping, MiFID Microstructure, and the MiFID II Transparency working groups. The updates, available via the FIX Trading Community website, clearly showed that work has now moved on from debating the various regulations to the very real task of adoption and implementation.

After the updates, a panel of industry experts took a look at the practicalities of MiFID II implementation. The panel all agreed that when it comes to MiFID II, now is the time to act. We are done with talking and debating, and firms must now have teams actively working on implementing MiFID II solutions, so that everyone is ready when January 2018 rolls around. One of the biggest fears regarding the implementation of MiFID II is that firms will do nothing, claiming they don’t feel they have enough clarity on the regulation.

However, as one panelist pointed out, waiting for this clarity from the regulators is a mistake, and everyone should be doing something and working on agreed interpretations of the rules in order to implement industry-wide standards. This is where an industry body such as the FIX Trading Community can play a crucial role. By bringing together the buy-side, sell-side and vendors in an open forum, the industry is able to agree on the best ways to move forward with the new regulation, regardless of whether there is enough clarity from the regulators themselves. Indeed, there was confirmation that many trade associations are now appreciating how crucial FIX is to the world of trading and are supporting much of the work that is being done by members.

As one panelist put it, “there is strength in numbers.” We know the intent of the regulation and what it’s trying to achieve; the clarity will come over time, and this will continue to be an ongoing process. As long as industry participants stay in sync with each other by being able to demonstrate their processes, sharing and engaging in the right forums, and are actively engaged in working on implementing MiFID II solutions, the regulators will be happy. What they won’t be happy with is if you simply say you haven’t done anything at all because the regulation was too vague.

Looking back at MiFID I, it’s clear that the regulation took a while to bed-in and stabilise, and we can expect the same to happen with MiFID II. There will be clarity that comes through from the regulators post-January 2018, and some parts of the regulation will inevitably change. The regulation will continue to evolve and, as one panelist predicted, “we will still be talking about MiFID II this time next year.” That said, inaction is clearly not an option.

There are more challenges that the FIX Trading Community would like to meet, including greater asset coverage – FICC in particular. These events present a great opportunity as a “call to arms” to get the experts in these assets classes involved. By using the knowledge that the Community has in the equities space, there is a real drive to start putting standards in place for other asset classes.

If you are interested in learning more about the initiatives, joining any of the working groups and joining FIX Trading Community, please contact fix@fixtrading.org