The Europe-wide legislation which governs the activity of financial services firms had been due to come into effect in January 2017.
‘MIFID II’ has been a concern for many in the investment industry, wary of a heavy handed approach impacting their profitability.
In its statement on the matter the Commission indicated that the concerns raised by market participants were a factor in the likely delay, and more time will be needed to get a satisfactory directive in place than earlier thought.
One specific issue flagged up is the complexity of the IT elements the new directive appears to require.
The level of reporting requirements firms would face under MIFID II is also a major bone of contention.
“MIFID II has many moving parts with a high technology impact,” said Andrew Henderson, partner and financial regulation expert at law firm Eversheds. “Added to the complexity of what it governs is the growing complexity of the EU law-making process itself as well as the increased number of EU Member States. This was always going to increase the risk of delay and with the resilience of the markets at stake, it seems sensible to give EU and national lawmakers and regulators time to get it right.”
“Ultimately, the challenge for firms directly or indirectly subject to MIFID II will be to maintain momentum despite being allowed to shift down a gear,” Henderson continued. “Though the pain of MIFID implementation may be delayed, it still cannot be denied.”