Regulators are still lenient with MiFID II – Cappitech claims

Companies are still struggling to get their systems compliant with MiFID II, but regulators have been lenient, a report from Cappitech claims.

In its latest survey, it found that none of the 31.6% of those to receive feedback from regulators on the quality of their submissions (in addition to automated rejections) have been fined.

The second annual MiFID II & Best Execution survey was comprised of responses from 83 brokerages, banks, asset managers and other financial and non-financial institutions.

Other findings from the report state 68% of respondents plan to use existing reporting solutions for future regulatory requirement, with 64% believing it’s important to have one solution across all reporting regimes.

The report also found only 55% monitor their reporting daily and 61.4% are not monitoring bed execution, despite their obligation to.

Mark Kelly, the author of the report, said, “The survey results point to firms still not being fully comfortable with MiFID II reporting requirements. At the beginning of 2019, firms had told us that this year would be one of setting KPIs and reviewing data quality, but this process is clearly happening more slowly than anticipated.

“The use of external analysis and tools to spot problems may alleviate some of these challenges on the basis of ‘don’t mark your own homework’ which will be important as the regulators will start to impose sanctions on firms who are not managing their data appropriately.”

MiFID II has been a complicated regulation for companies to get to grips with. Cappitech’s research found that 44% of respondents said their major pain point was reconciliation.

In 2018, the RegTech Council estimated regulators dedicated 30,000 pages and 1.5 million paragraphs to help firms understand the regulation. This cost the financial industry €2.5bn.

The European Securities and Markets Authority (ESMA) recently updated its Q&A for the regulation to help clarify aspects.


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