01 November 2017
Reporter: Becky Butcher

SimCorp: MiFID II remains a concern for buy-side firms

Some 28 percent of buy-side representatives are still unsure if and how their firm will be affected by the second Markets in Financial Instruments Directive (MiFID II), just 90 days before the implementation deadline, according to a SimCorp survey.

In the survey, of 150 North American buy-side participants from across 68 firms, 58 percent of participants confirmed that they will need to comply with MiFID II.

However, out of that figure, only 23 feel “extremely confident” that they will have a plan in place in time for the 3 January implementation deadline, while 77 percent are either “somewhat” or “not at all” confident.

Respondents were also questioned on what they thought were the top operational challenges.

Over half, 56 percent, thought that complying with transaction reporting requirements would be a biggest challenge, while 50 percent named understanding the new market structure as an issue. Finally, 45 percent thought that the unbundling of research and execution would be an operational challenge.

A recent survey from Teleware also revealed that there are still a large number of firms that are not prepared for the implementation date.

It found that almost half, 47 percent, admitted better education is required on the details of what MiFID II requires of them, while only 42 percent said people in their firms are “aware of MiFID II and are familiar with the requirements”.

A bigger concern was the 7 percent of those surveyed who said that employees are still “not aware of MiFID II and are not familiar with the requirements”.

Gernot Schmidt, product manager of MiFID II at SimCorp, described MiFID II as “one of the biggest pieces of regulation to ever hit the buy-side industry”.

Schmidt added that he is “not surprised by the extent of uncertainty and concern reflected in the research and poll results”, and added that “it [makes sense] that the new transaction reporting requirements rate high on the list of concerns”.

He said: “Daily detailed transaction reporting will be expanded to a much larger set of instrument types, which will call for data gathered from additional source systems to be aggregated. This aspect of MiFID II also provides a compelling case for systems and data integration and increased automation.”

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