Two months on from the European Commission’s announcement that MiFID II would have to be delayed, we have now had a further announcement from the European Commission that MiFID II will have to be delayed. Even the process of delay has been delayed.
Two months ago, we welcomed the plan for a realistic postponement. Now that we have a little more detail, we can again welcome the move, in so far as it goes. Two aspects of the decision look right: that the delay should be for a full 12 months and that it should apply to the whole directive, not just selected parts.
However, inexplicably, the Commission has decided not to delay the date of transposition, the all important date by which national regulators must have published their rules for implementing the directive. That date remains set at 3rd July, just over four months from today. What is wrong with that when it has been known for several years? What is wrong is that the Commission has still not finalised Level 2 and therefore national regulators still lack the complete picture from which to work. ESMA provided the Commission with Level 2 drafts in its Advice a full year ago.
This delay at the Commission is not an isolated occurrence. Take a look at UCITS V. There the Commission received Advice from ESMA in November 2014. It is now expected that Level 2 will finally emerge from the Commission sometime in Q3 of this year, whereas UCITS V comes into force just one month from now. And take the Market Abuse Regulation. MAR comes into force on 3rd July, but Level 2 is nowhere to be seen.
Why does this really matter? Working in a regulated industry entails a great many risks, pitfalls and uncertainties, but, while that is now a largely accepted fact of life in the world of financial services, it does not excuse incompetence on the part of the regulators, of which the European Commission is determined to make itself the biggest cheese. The knock-on effects of its actions are that national regulators will have to attempt to produce requirements without having the full foundation on which to base them and, in addition, there will be inadequate time to consult properly before finalising rules and guidance. It is, frankly, unacceptable to have requirements in place that are ill-considered and incomplete.
If such delays were incurred by national regulators, there would be threats of infraction proceedings. When delays are caused by the European Commission, there is hardly a squeak of protest. You will have noticed that deadlines for national regulators appear in the directive, providing enforceability. No such deadlines are set for the Commission’s own work.