Some may argue that organisations should be fully aware of their obligations and already well on their way to having compliant processes in place. The truth is that many are struggling with what they believe their role will be in this new world of regulation.
What is MiFID II?
MiFID II is an expansive regulation in terms of its ambition, remit and the impact it will have on how financial markets operate and how its participants respond to the overarching compliance it demands. It is intended to reduce the risks associated with what has been seen historically as light regulation, and ensure investors are treated fairly.
The purpose of this Directive is to bring uniformity to what is currently a diverse market place. Trading Venues, Approved Reporting Mechanisms (ARMs), Approved Publication Arrangement (APAs), Organized Trading Facility (OTFs), Investment Firms and Sell Side firms will each have a significant reporting obligation, to both the European Securities & Markets Authority (ESMA) and to their local regulatory body, known as National Competent Authorities – (NCAs).
Internal questions you should be asking?
Here are examples of some questions organisations affected by MiFID II should be asking:
Are you a Systematic Internaliser (SI)?
Are you clear about the lines of demarcation between investment fees and research fees?
Do you need to unbundle services to comply with the Directive, and have you considered the financial impact of doing so?
Are your algorithms back-tested and adequately controlled?
Can you promptly report across various trading venues to different regulators via multiple reporting mechanisms?
Do you have the data needed to produce reports, and can you manage and maintain this data appropriately?
Do you understand the implications of failing to meet these standards?
All of these questions and many more must be answered in order to comply with MiFID II, which is not only relevant for the orgranisations themselves, but also apply to its individual employees.
Organisations must therefore ensure both compliance with MiFID II regulations and demonstrate employees understand their responsibilities and the implications for non-compliance.
Online compliance training is just one of the means that many organisations are using to educate their workforce and there are many options on the market.
Thomson Reuters has compliance training courses that could assist. They explain the significant impact of MiFID II on financial services and its wide-ranging effects across the European Union and beyond, providing employees with the “why” of the changes imposed, which helps organisations implement a culture of compliance. These courses support Compliance functions across buy-side and sell side organisations through to the organisations outside of the EU who may think MiFID II won’t affect them.
Further MiFID II information on Practical Law