MiFID II: Challenges Ahead

 From Michael Hodson, Director of Asset Management Supervision

MiFID II represents the most substantial overhaul of EU legislation for markets in financial instruments in more than a decade. It presents a major implementation challenge not only for firms but also for Regulatory Authorities across Europe. With just 8 months to the ‘go live’ date time is running out and there will be no further extensions to the implementation deadline.

MiFID II represents the most substantial overhaul of EU legislation for markets in financial instruments in more than a decade. It presents a major implementation challenge not only for firms but also for Regulatory Authorities across Europe. With just 8 months to the ‘go live’ date time is running out and there will be no further extensions to the implementation deadline.

New Authorisations Process

Our MiFID application form and guidance has been reorganised and brought into line with the new rules and requirements. It follows the prescribed ESMA formats set out in the Level 2 texts and reflects the Central Bank’s obligation and commitment to supervisory convergence and to the goal of a common authorisations procedure across the European Union.

Product Intervention Powers

The Central Bank is also actively considering how best to exercise its new product intervention powers. Article 39 of MiFIR requires Competent Authorities to monitor the market for financial instruments and structured deposits which are marketed, distributed or sold in or from their Member State. A similar product monitoring requirement is also placed on ESMA and the EBA.

Waiver Applications

Applications for waivers for non-equity instruments are due to be submitted by trading venues in Q2 2017. These applications will be subject to review by the Central Bank and the ESMA taskforce in the second half of this year.

Central Bank Engagements

At previous engagements I outlined the Central Bank’s willingness to sit down with industry working groups and associations to address areas of common concern. To date, we have spoken at a number of round tables and conferences run by various industry participants and the Bank ourselves. We have found these engagements particularly useful in gauging firm preparedness and providing feedback to our ESMA representatives on areas where further clarity may be needed.

Transaction Reporting

Responses to our MiFID II questionnaire have indicated that 42 firms intend using an Approved Reporting Mechanism and 12 intend using an Approved Publication Arrangements. Any firms who intend operating either an ARM or an APA are encouraged to make contact with the Central Bank as early as possible so as to be involved in the upcoming industry testing.

Transposition

The Central Bank is communicating significant EU and domestic developments in relation to MiFID II to industry via its ‘Markets Update’ bulletin and interested parties can subscribe to receive this publication on the Central Bank’s website.

Now to turn away from MIFID II I would like to briefly touch on two other topics; the recent Client Assets Thematic Review and the Central Bank’s regulatory approach to Brexit.

Client Assets

While the review identified a number of specific findings and observations, we also noted a number of good practices during the course of the engagements. We have today issued a ‘Dear Chairman’ letter outlining these matters to all investment firms permitted to hold client assets. The protection of client assets is a strategic priority for the Central Bank, as it should be in your firms, and we expect boards to give careful consideration to the matters raised in this letter. Investment firms must strive for the highest possible standards in relation to safeguarding client assets, in order to ensure risks to investor protection are effectively managed.

Brexit

Ireland’s financial services sector has experienced steady growth over the last 20 years. We expect this growth to continue and due to Brexit anticipate a material increase in the number of applications in the coming period. We are actively engaging with all firms who are expressing an interest in setting up or expanding their operations in Ireland. We stand ready to accept these applications and to deal with them in a transparent, robust, consistent and predictable manner and in doing so ensuring the Central Bank maintains its reputation as a regulator with the highest regulatory standards. By doing so we deliver on our mandate of ‘protecting consumers and safeguarding stability’ while delivering effective regulation and fulfilling our gatekeeper role by ensuring that only ‘real’ financial service companies get authorised.

Michael Hodson

Director of Asset Management Supervision, Central Bank of Ireland

Key Messages

  • Firms should have completed their gap analysis and understand how MiFID II will impact on their business
  • Firms should be well into the process of designing the policies and procedures that will be required to comply with MiFID II as at 3 January 2018.
  • IT solutions should be designed, work on development should be nearing an end and the user testing should be planned.

We understand the significant challenge that MiFID II has presented to your business as competent authorities have had similar challenges to overcome. However, as I stated earlier there will be no further extensions to the implementation date. The Central Bank expects that all entities that fall within the scope of MiFID II will be compliant with the legislation as at 3 January 2018.

Michael Hodson

Director of Asset Management Supervision, Central Bank of Ireland

Further details available from  Central bank of Ireland  . Original source :  Source link here 

Get In Touch

If you have any questions, would like further information about Claritas, thank you.

Telephone : +353 (0) 85 864 2479

Contact Claritas

Address

Claritas Europe

Alexander House
The Sweepstakes
3 Ballsbridge Park
Ballsbridge
Dublin 4  Ireland

Related Posts
Mortgage Arrears and Repossessions | Summary of the Central Bank of Ireland's Residential Mortgage Arrears Read More
NPL Ireland | The team at CLARITAS have completed pre-purchase due diligence for multiple NPL Read More
TRACKER MORTGAGE EXAMINATION | Interesting comments made by Padraig Kissane yesterday at the Oireachtas Finance Read More

Connect with Claritas