MiFID II has been one of the most challenging regulatory changes, touching almost every aspect of the European investment market.
“When something as potentially market-changing as MiFID II comes along, we analyze it through three lenses”, said Paul North, head of product management EMEA at BNY Mellon during the MiFID II and PRIIPs regulatory breakout session of BNY Mellon’s sixth annual Tax & Regulatory Client Forum in London earlier this month.
“First, we ask ourselves about the likely direct impact on us as a bank and regulated entity. Second, we review our products to consider what changes we may need to make to support our clients. Third, we ask ourselves, what changes will clients ask us to make on their behalf? A problem with MiFID II is those three questions have been far from easy to answer.”
Fellow panellist Beth Dowling-Jones, senior change manager at BNY Mellon, took the audience through the extensive communications exercise BNY Mellon has been undertaking with clients about MiFID II. She said: “There has been a vast swathe of communications we have had to deliver, much of it mandatory. Throughout our objective has been to manage that in a way that doesn’t overwhelm those on the receiving end.”
Ross Whitehill, head of strategic regulatory office, Markets, EMEA at BNY Mellon, said there remained many details of MiFID that are likely to cause problems when it is implemented in January. A particular concern for him is the requirement for legal entity identifier (LEI) for some types of trade, because a high proportion of the market is yet to have a LEI in place. He said: “It’s no LEI, no trade. Could that cause a liquidity problem at the beginning of next year?”
The panellists were asked what they would have liked to change about MiFID II. Christine Young, head of business risk and regulatory control for EMEA Asset Servicing at BNY Mellon, said it was the dropping of the phrase ‘and ancillary services’ into many of the regulations. She said: “This is causing all sorts of problems and additional costs without necessarily adding any value.” Beth Dowling-Jones said that with the benefit of hindsight “the whole industry should have got started in earnest on MiFID II a lot earlier”. Ross Whitehill offered a straightforward wish: “Just plainer and simpler, and with clear beneficial outcomes.”