Following intense speculation, in February the European Commission published legislative proposals to delay both the MiFID II and MiFIR application dates by one year. </p> The European Securities and Markets Authority (ESMA) informed the European Commission that neither the competent authorities, nor market participants would be in a position to have the necessary systems in place by the original deadline of 3 January 2017.</p> Delivering the MiFID II package requires ESMA, firms and national competent authorities to create an exceptionally complex technical infrastructure. One of the most challenging aspects for ESMA is aggregating data from around 300 trading venues on over 15 million financial instruments.</p> So, in order to avoid legal uncertainty and widespread market disruption, an extension was deemed essential, with Jonathan Hill, Commissioner for Financial Services, Financial Stability and Capital Markets Union, advising that</a> they will “give people another year to prepare properly and make the necessary changes to their systems.”</p> And now the European Commission has asked ESMA to also rethink some of the more contentious aspects</a> of its planned reforms of MiFID II. </p> MEPs have pushed for new proposals, but maintain that a new January 2018 deadline must not be further over-run.</p> A significant development</strong> </p> The proposed delay will apply to the package in full, rather than in part - despite earlier thinking that various elements of MiFID II may be phased in. </p> The European Commission has not yet proposed to extend the date by which Member States must transpose the Directive (3 July 2016). This should give firms more time to incorporate the local rules into implementation programmes, although Member States may seek to secure an extension to the transposition date during negotiations. </p> Trade associations joined regulators in welcoming the delay, but also warned that the industry still has a lot of work to do.</p> A reprieve for some</strong></p> A more realistic timeline means greater certainty for planning budgets and locking down resources for MiFID II programmes, as well as allowing firms to meet the deadline and consider more strategic solutions. For example, the delay would provide further time for advisory firms in mainland Europe to adapt and develop their business models.</p> After all, rule changes have to work well for customers, so implementing change which could lead to significant disruption and cost for the industry, which ultimately affects the customer, must be carefully considered.</p> Also, delaying the entire package in full, rather than in part, will make implementation less complex than might have otherwise been. </p> But the focus must remain</strong></p> On the flipside, there could be a loss of impetus for planning, implementation and decision-making. Commentators note that firms should be careful not to pause in their MiFID II implementation programmes – even given the new timeframe, organisations can only meet the application date if work is ongoing.</p> In addition, firms must consider, and effectively manage, the overlap of the MiFID II programme with other regulatory implementation programmes. MiFID II overlaps with EU Market Abuse Regulation, the EU Packaged Retail and Insurance-based Investment Products Regulation, and the Insurance Distribution Directive – amongst others.</p> For example, if both MiFID II and the Insurance Distribution Directive come into force in early 2018, the potential for regulatory arbitrage within the advisory sector is significantly reduced. It is important to view MiFID II through a wider lens, and not think about it in isolation.</p> Sentiment from across the industry warns of the danger of businesses seeing the delay as an opportunity to slow the pace of the changes they need to make – they should instead see a chance to fully ensure that their developments are suited to the significantly different operating environment that will soon face them.</p> Despite any stay of execution, firms should continue to press ahead with their implementation plans.</p>