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LONDON, Nov 24 (Reuters) - Delaying the European Union’s landmark securities reform by a year to 2018 would be long enough to allow those involved to prepare for their introduction, the bloc’s executive European Commission said in a document on Tuesday.
EU regulators have said that neither they nor the industry will be ready in time for a planned January 2017 start for the so-called MiFID II law, which seeks to plug regulatory gaps highlighted by the 2007-09 financial crisis.
“Setting the timeframe at January 2018 would appear appropriate so as to be reasonably satisfied that there will be no need for a repetition of the delay, but without extending the timeframe excessively and hence relax the implementation speed,” the document seen by Reuters said.
Earlier this month a senior European Commission official signalled that a one-year delay may be needed and the document sets out in a systematic way why such a period would be better than a shorter delay, or perhaps a delay only to some elements.
The document, prepared with the help of the EU’s securities watchdog ESMA, said the new transactions reporting system being introduced by MiFID II has to be built from scratch to cover 15 million instruments across 300 trading platforms.
The data is needed to make core parts of MiFID II work, such as deciding if “position limits” on commodities have been met, the document said.
“In view of the scope and complexity of these tasks, it has become apparent that the time needed for the technical implementation has been underestimated,” it added.
Time and resources would have to be tied up if there was an attempt to go ahead on time with some parts of MiFID II such as its investor protection rules, the document said.
“Apart from the timing of the legislative process, there are several reasons for being cautious about pursuing such approach when it comes to implementation,” the document added.
Reporting by Huw Jones; Editing by Susan Thomas and Keith Weir