The deadline for MiFID II implementation is fast approaching and given the heavy compliance burden on individual firms it is easy to lose sight of why this fundamental overhaul of European capital markets was necessary. Over many years, this new transparency regime across asset classes has been developed in order to try and ensure a fair and more equitable single capital market for European investors. 

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Since the advent of MiFID I bringing more competition to equities trading, there have been numerous technological advances and many new entrants participating as financial intermediaries in the European markets. The new legislation therefore updates equity trading rules to ensure that lit venues are once again conducive to buyside trading activity whilst extending the transparency requirement to other asset classes for the first time. New reporting requirements and where possible the unbundling of services were enhanced to give the buyside more information and choice with respect to where best to trade. This shift away from a dependence on a small number of broker dealers will hopefully ensure that the clients get real best execution and fair treatment which in turn should encourage a new generation of European investors to have the confidence to invest rather than save for their sustainable future.

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It may seem as though a lot of the MiFID II requirements are simply sunk compliance costs however those who think beyond them and fully embrace the challenges of a data driven marketplace will over time see the best results. The question your trading desks should be asking is not just whether or not the solutions you are looking at for MiFID implementation will meet the requirements of the regulation , but whether they will actually allow your firm to take advantage of all the new information that will become available?

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Are you in a position to absorb the data and adjust your strategies accordingly? Does your technology for routing orders allow you to move swiftly between new platforms that may emerge and attract more, higher quality liquidity?

The overarching objective throughout the legislative process was to empower the investor community to provide better returns for their end clients and to ensure that the European markets were fully competitive and fair to all participants.