Wealth management firms will face five years’ worth of work to comply with MiFID II legislation, the framework of European Union legislation for financial instruments, according to research by financial regulation consultancy Bovill.
With less than 300 days to go until the MiFID II deadline, the pressure is on for firms to meet the necessary requirements.
When asked about the level of resource MiFID II would require, leading wealth management firms assessed the number of days it would take to meet each requirement outlined in the legislation, excluding IT development.
The data shows that, on average, businesses will need 1,363 days – the equivalent of 10,904 working hours and more than five times the number of available working hours in a year. Some businesses predict that they will require as much as 1,900 days to ensure compliance.
Charlie Baillie, associate at Bovill, says: “Essentially, businesses that have not yet begun preparing for this change in regulation have less than a year to carry out five years’ worth of work. This points to the need for an increased level of resource and effort leading up to 3 January 2018. There is a danger that firms will feel overwhelmed by the pace of regulatory change taking place across the international business landscape. However, there are no shortcuts and time is running out. Firms must address this urgently, or risk incurring potentially being served with fines by the regulator for failing to comply.”
The scale and scope of MiFID II requirements present significant operational and technical challenges for the financial services sector. Despite the extension of the legislation until 3 January 2018, there remains a great deal of work to be done for many firms. Bovill’s findings identify where firms will have to prioritise their resources. Generally, best execution was projected by businesses as requiring the most resource (277 days), followed by providing information to clients (271 days) and transaction reporting (256 days).
Baillie adds: “MiFID II aims to make financial markets more efficient, resilient and transparent. Nevertheless, it is a complex piece of legislation. Preparing for MiFID II isn’t a one-size-fits-all exercise and, with less than a year to go until the legislation comes into effect, businesses need to have a clear and detailed implementation plan in place. It is critical that financial services firms undertake a gap analysis to accurately identify areas where time, money and human capital should be prioritised.”
