I had several conversation about MiFID with compliance people in the past few weeks and I sometimes wonder why the experts are the only ones who seem to be alarmed that there are only 167 working days to November 1st. A lot of compliance people still have a wait and see attitude.
Do they know anything I don't ?
MiFID compliance is predominantly procedural rather than creating reports and algorythms, changing the way people work takes longer than changing software. Yes, there a lot things that are still uncomfortably vague but some concepts are quite clear and need to be addressed in a way that is appropriate for the organisation, for the specific financial instrument and for the specific client.
For instance the concepts of suitable and appropriate advice may still not be exactly crystal clear but they do depend on the classification of the client and the specific financial instrument. You may need legal advice after you have defined your criteria behind suitability and appropriateness but you have to define the policy first.
Another example is the concept of best execution. We now know that is more than best value, but we also know that the whole policy will be linked with the trading venue chosen and therefore the availability of information provided by this trading venue. Therefore the little we have established so far is already tied to two things : a reasonable effort in working with more than one trading venue, sourcing and distributing the relevant market data and establishing policies and procedures to select among trading venues. Yes some part of 'best execution according to MiFID' are still not clear, but there is work to be done whilst the high level concepts and the big picture is being discussed.
On top of that both examples will create changes in the corporate reference data, those changes may affect all the IT systems used by the company.
A lot of small and medium sized institutions are not in a hurry. 167 working days does not look like a long time to prepare for what might as well be considered Big Bang 2.
Do they know anything I don't ?
MiFID compliance is predominantly procedural rather than creating reports and algorythms, changing the way people work takes longer than changing software. Yes, there a lot things that are still uncomfortably vague but some concepts are quite clear and need to be addressed in a way that is appropriate for the organisation, for the specific financial instrument and for the specific client.
For instance the concepts of suitable and appropriate advice may still not be exactly crystal clear but they do depend on the classification of the client and the specific financial instrument. You may need legal advice after you have defined your criteria behind suitability and appropriateness but you have to define the policy first.
Another example is the concept of best execution. We now know that is more than best value, but we also know that the whole policy will be linked with the trading venue chosen and therefore the availability of information provided by this trading venue. Therefore the little we have established so far is already tied to two things : a reasonable effort in working with more than one trading venue, sourcing and distributing the relevant market data and establishing policies and procedures to select among trading venues. Yes some part of 'best execution according to MiFID' are still not clear, but there is work to be done whilst the high level concepts and the big picture is being discussed.
On top of that both examples will create changes in the corporate reference data, those changes may affect all the IT systems used by the company.
A lot of small and medium sized institutions are not in a hurry. 167 working days does not look like a long time to prepare for what might as well be considered Big Bang 2.
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