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MiFID II and a year of regulatory change

John Mason
John Mason
Global Head Enterprise Middle and Back Office, Refinitiv

A big year of regulatory change in financial markets saw the smooth launch of MiFID II, as well as the arrival of PRIIPs, GDPR and AnaCredit. How did compliance teams cope with this huge workload and what challenges lie ahead in 2019 and beyond?


  1. Financial markets coped well with MiFID II in January, but it’s unlikely regulatory change will stop there as ESMA is voicing concerns about market transparency.
  2. Other examples of regulatory change in financial markets during 2018 included PRIIPs and AnaCredit, as well the wider impact of Europe’s GDPR rules.
  3. An area of focus in 2019 will be where the United States goes with its financial regulation, potentially causing a divergence from the approach in the EU.

A colossal year for regulatory change saw the introduction of MiFID II occupy the financial sector in 2018, while other regulations, such as GDPR, affected even the largest global organizations.

Inevitably, the Brexit debate continued with much speculation on the impact that leaving the European Union will have on the implementation of financial regulation in the UK, as well as the City of London’s relationship with overseas markets.

How to find common ground for data management across multiple regulations

Cryptocurrencies also shot to prominence during the year, sparking plenty of commentary about how such assets should be regulated.

Ready for MiFID III?

It seems a long time ago now, but the morning of 3 January was met with some apprehension as we awoke to headlines such as “The Day of the MiFIDs” in London newspaper City A.M.

We can now say markets coped pretty well. No major crashes, no outages, on the whole pretty good but with the inevitable teething issues.

It’s not perfect and indeed still not complete in certain areas.

We await the Systematic Internaliser thresholds for derivatives in February, and of course we can’t ignore the consequences of what could happen if the UK exits European markets on a hard Brexit basis. Will ESMA publish or will they wait to revise?

We also know that MiFID II will be revisited. Already there is talk of MiFID III. With ESMA voicing concerns about market transparency, it appears a third instalment of this regulation may not be as far away as people think.

MiFID II wasn’t the only regulatory change, of course. The EU Regulation for PRIIPs (Packaged Retail Investment & Insurance Products) sneaked in under the radar in January, and then later in the year we saw GDPR and AnaCredit.

On the horizon, we can see FRTB and even though regulators seem uncertain on exactly what they’ll be asking for and when, there is no question that it will have a huge impact. We await the Basel committee’s response to its earlier consultation with interest.

Managing data for the Fundamental Review of the Trading Book (FRTB)

Regulatory outlook for 2019

So what will 2019 have in store, in addition to the unquestionable cloud of uncertainty that is Brexit? Even though Brexit isn’t a regulation, its impact across Europe and beyond cannot be ignored.

We will most likely see venues that wish to remain MTFs, OTFs and APAs establishing legal entities in the EU, meaning that we will have additional MIC codes to deal with and potentially splits in liquidity.

The potential threat of parallel thresholds from ESMA and the Financial Conduct Authority (FCA) in the UK is also something that we will need to cater for in our market and reference data systems.

It may mean an actual reduction in trade reporting as the FCA has already said that instruments covered under the current waiver program will most likely not be reported during any transition period.

The U.S. and cryptocurrencies in 2019

The other fascinating area is going to be where the United States goes with its regulation.

With a fundamental philosophical difference between the U.S., which views liquidity as underpinning stable markets, and the EU, which regards regulation as underpinning stable markets, the potential exists for a divergence to appear between the two markets.

Where the FCA ultimately decides to take the UK market regulatory structure will be critical, I feel, to whether London keeps its current pre-eminent position.

Cryptocurrencies also have the potential to dominate the regulatory agenda over the next few years.

With cash markets being used less and less globally, and banks discussing the prospect of initiating their own digital currencies, regulators will have to wrestle with how and if they even allow these instruments to be traded within their jurisdiction.

If you think 2018 was the end of regulation, or even the beginning of the end of regulatory change in financial markets, think again.

Learn how Refinitiv can help you thrive in a MiFID II world