Corporate Advisory

MiFID II – Technology and Data sited as firms biggest challenges

Why a technology upgrade Is vital for MiFID II

Half of firms point to a lack of internal data governance or poor data quality as the biggest challenge they face in preparing for MiFID II compliance, while another 17% say poor technology and manual processes are their main hurdles. Yet the majority of firms still plan on leveraging their existing reporting infrastructure to comply with MiFID II reporting requirements.

MiFID II is expected to provide some of the biggest data compliance challenges in recent times when it goes live in 2018, yet many firms feel their supporting systems may not be adequate to meet the regulation’s extensive data reporting and validation requirements.

Market surveys have found that 50% of firms either sited a lack of internal data governance or poor data quality as the biggest challenge they face in preparing for MiFID II compliance, while another 17% said poor technology and manual processes are their main hurdles.

Surveys have also found that the majority of firms, some 52%, still plan on leveraging their existing reporting infrastructure to comply with MiFID II reporting requirements. That means despite recognising their own deficiencies, they still plan to utilise those same support systems. This will only set organisations back.

While firms are facing greater budgetary pressures as a result of increasing regulation, the price of ignoring operational deficiencies is recognised as leading to even higher costs in the future.

Often, firms are burned by creating tactical reporting solutions that can limit functionality and command attention throughout the organisation. A significant amount of time and money is then dedicated to manual improvements and updates in order to comply with new specifications and regulations.

The sheer scope of MiFID II is going to require greater granularity on source and reference data. For the sake of comparison, the data fields required under EMIR included 20 fields, whereas MiFID II is expected to have roughly 65 to 85 fields. With so many third parties involved an enterprise compliance model is crucial for standardisation between all parties to ensure proper transparency, effective communication and efficient data exchange.