MiFID II: an opportunity to leverage technology…

“We believe that MiFID II offers new opportunities for rationalization of operations and potential reductions in operating costs. The reduction in operating costs can come from the digitization of processes and workflows, avoidance of redundancies across the value chain and better use of available human, technological and financial resources.” (Accenture)

“Technology certainly can help, as these will support an organisation to implement processes and workflows that are based on best practice and the joint experience of a large user base – provided, of course, you chose a platform from a credible vendor with an engaged user group.”  (Financier Worldwide)

“If companies opt for a fully hosted service offering, they will benefit further from economies of scale and having an expert organisation managing and monitoring the solution, further reducing the cost of ownership and reducing management overhead and management time spent on the solution.”  (Financier Worldwide)

… As a matter of cost control…


“This compliance cost will create a heavier burden on smaller firms and could become a barrier to entering the market, or jeopardize their existing market position.” (Deloitte)

“Given the cost of the investment required to meet regulatory demands, coupled with increased capital and liquidity requirements due to Basel III and CRD IV, some businesses will no longer be profitable. The return on capital employed (ROCE) figures may struggle to reach double digits. This may apply to mid-tier firms that do not have capital available to invest.” (EY)

 … As well as of strategy

“MiFID II is not just a compliance exercise. There are major strategic implications that could bring market opportunities and competitive advantage for those who start to plan in advance, or potential revenue loss for those who fail to react.” (EY)

“Firms that manage the regulatory agenda as part of their strategic evolution and maintain flexibility will capture market opportunities in contrast to those that view implementation merely as a compliance task.” (EY)

Which RegTech utilities are best placed to harness…

“Firms are also increasingly looking at greater use of market utilities for data and reporting. Those firms that have already invested in enhancing their data architecture across multiple asset classes will be best placed.” (EY)

“By harnessing technology to improve and optimize a financial institution’s ability to comply with its regulatory requirements and automate the regulatory compliance process as much as possible, RegTech has the potential to bring huge benefits and cost savings to the investment management industry.” (SimCorp)

“Many asset managers and other intermediaries who lack the scale to invest in systems, may look toward new outsourcing service providers as a way to provide support services and facilitation at the appropriate price points. Parties who outsource will still need to perform the necessary regulatory due diligence and manage operational complexities in the front, middle and back offices. There is a likely increase in industry utilities (e.g., data) as firms look to share costs and leverage regulatory investment.” (EY)

… Provided robust standards are established

“Regulatory changes have caused firms to implement new or amended processes across the front-to-back lifecycle in order to be compliant. [ … ] In order for some of these firms to continue to provide the services desired by their client base and to remain profitable, there is a need to adopt a strategy to standardize, digitize and automate front-to-back processes. [ … ] ISDA believes there is a need for industry agreement on the process, behaviors and data elements of the derivatives market. [ … ] Standardization is a core facilitator to both RegTech and FinTech.” (ISDA)

“By identifying data synergies between global reporting regulations (such as EMIR trade reporting and FCA transaction reporting), and building centralized regulatory reporting engines, we believe compliance with MiFID II helps avoid the additional effort of maintaining a decentralized reporting infrastructure. Centralized repositories can also promote data quality and data exploitation.” (Accenture)


… Provided robust standards are established (cont’d)

“In terms of benefits, the sharing of development costs and maintenance costs across a large user base can lead to a lower cost of ownership. Equally, sharing experience and industry best practice through product enhancements based on user group meetings, and individual customers’ feedback and requests for functional changes, will ensure that your compliance function remains in step and competitive in the rapidly changing compliance space.” (Financier Worldwide)

“Firstly, JWG recommended the establishment of an industry committee to prioritise the key RegTech domains and their requirements, and an implementation steering group for each domain […] For example, regulatory reporting could be considered one RegTech domain. Trade and transaction reporting rules require large financial institutions to track millions of products and thousands of trading systems, resulting in a system with billions of reports that are a challenge to manage well […] Here, a committee could help curate a common canonical data model that could accelerate the adoption of solutions across the sector (e.g., open source data validation rules).” (RegTechFS)