After weeks of speculation, news has broken that the European Commission is contemplating a year-long delay to the implementation of MiFID II. This is no guarantee, though, as the Commission can only implement this with the agreement of both the European Parliament and the Council, and European MEPs in particular appear in no mood to acquiesce. The question is: what now?
If MEPs believe that the ESMA interpretation of the Level 1 text is truly a step too far, are we really back to the drawing board? And what implications will this have for capital markets in Europe?
According to various news reports, the European Commission has now accepted the need to postpone the implementation of MiFID II from January 3rd 2017 by possibly a year due to the level of complexity involved as well increasing concerns that the necessary technology will not be in place in time.
The director in the EU Commission’s financial services department, Martin Merlin, admitted to members of the European Parliament that:“maybe the simplest and most legally sound approach would be to delay the whole package for one year,” adding that a delay was needed, “If we want to have a smooth and effective implementation.”
This admission follows weeks of market speculation about a possible delay. First raised by the Investment Association back in September, the industry has been clamoring for a sufficient delay given the complexity of the proposed Regulatory Technical Standards, particularly in relation to the transparency rules for non-equity markets.