MiFID II Post Go-Live

So the 3rd of January 2018 has been and gone, the much anticipated yet much feared landmark regulation - MiFID II - is now in force. Let’s breathe a sigh of relief, pat ourselves on the back and move onto the next project.

What now for MiFID II?

Well, not so fast. Like its predecessor, this MiFID beast will not be slayed so quickly. New disclosures in best execution came to fruition in April and SI transitions rules are not completing until September, then add in remediation and replacing tactical solutions work, not to mention regulator enforcement activity resulting from the surveillance of the estimated annual 1 trillion data points on transaction reports and it is easy to see how MiFID II could continue for some time to come. And we have not even considered the implications for firm restructuring due to Banking Reform regulations or Brexit. Some commentators have estimated that the future costs of MiFID II will be in excess of 50% of the pre-January 2018 costs could be spent post go-live.

It is going to be essential to maintain focus, commitment and delivery discipline in order to prevent the post go-live activity from dragging on too long or exiting too quickly and leaving business as usual team with too much to resolve.

MiFID II Compliance for a sell side client

To shine more light on the magnitude and nature of outstanding work required to be fully MiFID II compliant, let’s review some experiences of what remains on client outreach and repapering activities from a sell side client.

At this particular client, the outreach and repapering stream committed to the following broad deliverables;

Determine the correct outreach population ensuring all active clients are repapered. No repaper means no trading post 3rd Jan

Collect additional client data such as legal entity identifier vs natural person identifier, has the client delegated their duties to a 3rd party authorised person etc.

Update and issue key client documents such as client categorisation letters including opt up letters, product risk warnings, cost and charges tariff cards, client information on the order execution policy etc.

Depending on client category, obtain express from the client on the order of execution policy

Obtain acknowledgement from the client that they have received the various key documents

Update and cleanse client reference data once outreach on client has been confirmed and completed

Update and enhance client on-boarding processes

Develop new fields on existing firm databases and applications

To mitigate business risks against the possibility of non-compliance, it was essential to have the client on-boarding teams focusing on prioritising the tasks around;

High value/priority clients

Legal entity identifier details

Signature/confirmation on our consent form consisting express consent on order of execution policy and acknowledgement of documents received

Ongoing attention to cover post go-live activities

Despite a successful project delivery, the project team will remain in situ for several additional months to cover areas of post go-live activities including;

Completing the embedding of new on-boarding procedures so front office, client service and the BAU on-boarding function is capable of taking over all MiFID related on-boarding activities from the project team

Uploading all completed outreach data onto the enhanced client reference data system

Reconciliation of data uploaded and what is currently appearing in the data system

Priority remediation of missing client consent escalated to sales

Full outreach and repapering of the remaining tranched of lower priority clients

Formally responding to the ongoing MiFID II queries received from our clients about anything from confirming SI, OTF/MTF status to approving consent forms to assisting with transaction reporting

We are well positioned to assess MiFID II programmes

To help firms close out the remaining MiFID II activities, Morgan mckinley can provide an assessment of your MiFID II programme with a variety of options from an operation and or compliance risk assessment, or more classical post implementation project reviews. Morgan McKinley Consulting can also help you build and deliver a disciplined closure plan whilst rejuvenating your teams with experienced and committed practitioners.