In a statement issued on Wednesday the Commission said the extension was warranted by “the exceptional technical implementation challenges faced by regulators and market participants”.
“The European Commission has today proposed granting national competent authorities and market participants one additional year to comply with the rules set out in the revised Markets in Financial Instruments Directive, known as MiFID II,” the statement said.
If approved by national governments, the delay would move the start date for the directive to January 3, 2018.
Jonathan Hill, commissioner for Financial Services, Financial Stability and Capital Markets Union said: “Given the complexity of the technical challenges highlighted by ESMA, it makes sense to extend the deadline for MiFID II.
“We will therefore give people another year to prepare properly and make the necessary changes to their systems. Meanwhile, we are pressing ahead with the level II legislation to implement MiFID II and expect to announce those measures shortly.”
Industry pressure
Financial firms affected by the new directive have long been complaining that the ongoing uncertainty over the implementation of Mifid II has made it difficult for them to forward plan, with some fearing that they are already falling behind.
Speaking at the Asian Financial Forum in Hong Kong, last month ESMA chairman Steven Maijoor indicated that a one-year extension was on the cards though he said even this might not be sufficient.
“We suggested a year delay but that assumes a relatively speedy endorsement of all the technical standards. The final making of these IT systems can only really start once these technical standards are finally set, and that requires that these are endorsed by the Commission and also accepted by the Parliament and Council,” Maijoor said.
MiFID covers securities markets, investment firms and intermediaries, and was created in response to the financial crisis to help forge a more competitive and integrated EU financial market. In recognition that some areas of the original directive needed reinforcement or revision Mifid II was proposed.
New protections
For financial intermediaries the new MiFID II will strengthen the protection of investors by introducing robust organisational and conduct requirements.
It also aims to ensure that trading takes place on regulated platforms; introduces new rules on high frequency trading; improves the transparency and oversight of financial markets and will strengthen competition in the trading and clearing of financial instruments.
This EU said its new application date extension does not have an impact on the timeline for adoption of the ‘level II’ implementing measures under MiFID II/MiFIR.
“The European Commission will proceed with their adoption irrespective of the new date of entry into application of MiFID II. This will provide legal certainty for the new provisions,” it said.
A period of 30 months between the adoption and the entry of application of MiFID II had already been foreseen to take account of the very high level of complexity of the package. The extension of the deadline is strictly limited to what is necessary to allow the technical implementation work to be finalised.
