Second Markets in Financial Instruments Directive: Firms should view the practical challenge of meeting the new record keeping, transaction reporting and best execution requirements not as a bureaucratic nuisance but as an opportunity

Matt Smith

Journal of Securities Operations & Custody, 2018, vol. 10, issue 4, 290-295

Abstract: Second Markets in Financial Instruments Directive (MiFID II) loomed long on the horizon for financial services firms trading in or with European Union (EU) member states. After seven years in the works — including a year’s postponement — the legislation finally came into force on 3rd January, 2018, marking arguably the biggest regulatory change imposed on the financial services industry since the global financial crisis. This paper considers how, despite its implementation now being some six months ago, many firms still see compliance with MiFID II as a daunting process — and it is not difficult to see why. MiFID II is a notoriously complex piece of regulation with many moving parts. The paper discusses how the crisis that brought the global financial system to its knees a decade ago precipitated a swathe of new rules within the sector designed to prevent a recurrence, and how, like the Dodd-Frank Act in the US, MiFID II mandates extensive record-keeping and reporting requirements. At the core of MiFID II is the goal of increasing the efficiency, resilience and transparency of financial markets and strengthening investor protection. As the paper concludes, to continue to function successfully under the new regulatory regime, all firms affected need to embrace the spirit and the letter of these new principles and keep both at the heart of their compliance strategies.

Keywords: MiFID II; regulation; compliance; regtech; technology; data (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2018
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