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At BCS Consulting, we are focused on delivering complex business change projects in banking and the financial markets that exceed client objectives and deliver impressive results.

At BCS Consulting, we use our deep domain knowledge and experience to help clients define and deliver large scale business and technology change initiatives.

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At BCS Consulting, we like to share our informed thoughts and opinions on the latest developments in the financial services marketplace.

    MiFID II: what does it mean for the buy-side?

    Ben Nadel
    Ben Nadel

    • The industry is closing the year with significantly more clarity on the MiFID II rules than it started with, however, uncertainty remains in a number of areas that particularly affect the buy-side. With the January 2018 deadline just over twelve months away, buy-side firms must continue to plan for the multitude of changes needed to ensure regulatory compliance. We believe that MiFID II will impact the buy-side in the following ways:

    To bundle, or not to bundle…

    Unbundling rules are a major challenge for the buy-side. Products and services that are traditionally sold alongside execution, such as research, will need to be priced and delivered in their component parts. This will require revised pricing structures, comprehensive client outreach and a change to buy-side and broker relationships.

    Suitable, or not suitable…

    The buy-side will need to evidence the suitability and appropriateness of the products and services that they acquire on behalf of their investors. For many this will mean a review and update of KYC and product governance processes.

    To report, or not to report…

    There is definitely still confusion over which of the many reporting aspects of MiFID II apply to the buy-side. Whilst some firms will have already taken on this regulatory burden as a result of EMIR or Dodd Frank, many still outsource reporting to their broker. Unfortunately it is unlikely this will be possible under MiFID II. With more brokers falling under the systematic internaliser (SI) rules, buy-side firms are in essence dealing with a venue. To satisfy their reporting obligations under MiFID II, buy-side firms will need to supply much more data to their trading platform performing the reporting or acquire the technology to report themselves.

    But what does it all mean…

    Most buy-side firms know what aspects of MiFID II impact their business. The next challenge is planning and implementing the changes to achieve compliance by the end of next year. Unlike banks, they do not have a Regulatory Change team capable of delivering regulation on the scale of MiFID II. A number of buy-side firms are looking to partner with consultancies that have MiFID II regulatory change experts, intimate with how the market is responding to MiFID II, and can help them achieve compliance.

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