MiFID II is right around the corner. Are you prepared?

| December 11 2017


Beginning January 3, 2018, MiFID II goes into effect. The goal of the new legislation is to make financial markets more efficient and transparent and to protect investors. What does this mean for your company, and what will happen if you aren’t prepared?

How did this start?

MiFID, or the Markets in Financial Instruments Directive, has been a major piece of EU regulation since 2007. The legislation applies to investment firms, regulated markets, shares and more, and overall, it aims to create fair, safe and efficient markets. Starting in 2011, debates took place to modify the terms, and in 2014, the official revisions were published to the EU Official Journal. These changes are known as MiFID II.

What does this mean for my company?

You’ll need to be aware of the new requirements for reporting, which are designed to increase transparency. There will also be new organizational requirements for investment firms and trading organizations. Since the regulation places a heavy focus on protecting investors, so if your business offers investment advice, pay special attention to the new requirements for product governance.

For all financial institutions, take note of the requirement that timestamps for trading utilize a high level of precision - within 100 microseconds of UTC. This guarantees synchronization of business clocks, in order to create more consistent, transparent reporting across the board.

What’s the risk of noncompliance?

Trust us, you don’t want to take any chances with MiFID II. Fines for noncompliance could reach 5 Million Euros, or 10% of global turnover. MiFID penalties since 2007 have totaled over 30 million Euros. Most recently, in 2015, the FCA fined Merrill Lynch International 13,285,900 Euros for inaccurate reporting. With the increase in reporting requirements that come with MiFID II, there’s a chance that fines will increase in 2018 and beyond.

Will American companies be affected?

Just like GDPR, if your company has customers in the EU, you’ll need to be compliant with MiFID II. It’s better to analyze your customer base before the regulation goes into effect to ensure that you’ll have time to address any discrepancies in your reporting before the January deadline.

How do I prepare?

Proactivity is key, so start by analyzing your reporting to find out where the gaps are. By using an archiving service like Hanzo, you can collect and preserve your client facing websites, including dynamic content like investment calculators, all while also collecting your company’s internal content. It’s important to make sure the data you’re collecting is legally-defensible, so in the event that you need to present the collected information to regulators, you’ll be prepared with a native format copy.

Don’t risk facing large fines for noncompliance. There isn’t much time left to prepare, so contact our MiFID II experts today for an analysis of your current processes.




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