EU securities chief says one-year Mifid II delay may not be enough

HONG KONG (Reuters) - Europe’s top securities regulator expects the European Commission to propose a delay to the introduction of sweeping new trading rules “within weeks” but warned on Monday that a 12-month postponement may not be enough.

The comments come amid growing calls from European banks, trading firms and investors for the European Commission, Europe’s executive body, to finalize the implementation timeframe for the Markets in Financial Instruments Directive, a set of reforms that will overhaul the way securities and commodities are traded in Europe - better known as Mifid II.

Financial firms say ongoing uncertainty over the implementation date for Mifid II has made it difficult to plan and budget, with fears some firms are already falling behind.

Speaking to Reuters on the sidelines of the Asian Financial Forum in Hong Kong, Steven Maijoor, chair of the EU’s European Securities and Markets Authority (ESMA), said: “I am optimistic there will be a delay.

“It’s very important for market participants and all of us to know. I would expect that this would be settled in a few weeks. But whether it’s a year, or shorter or longer, or whether it’s for all of Mifid or only a part of Mifid, that’s really a political decision.”

He added that a year-long delay may not be adequate if the European Parliament, Commission and Council, which represents member states, take too long to sign-off on so-called “technical standards” which are a practical blueprint for the operational changes necessary.

“We suggested a year delay but that assumes a relatively speedy endorsement of all the technical standards. The final making of these IT systems can only really start once these technical standards are finally set, and that requires that these are endorsed by the Commission and also accepted by the Parliament and Council. If that process is lengthened too much then a year might not be sufficient,” Maijoor said.

ESMA asked the Commission in October to delay the implementation of Mifid II by one-year to January 2018 because there was not enough time for ESMA, national regulators and market participants to make the necessary IT changes.

The Commission and European Parliament have said they support a delay, but the Commission has yet to propose draft legislation necessary to amend the start date under EU law. Once the amendment is drafted it must be approved by the Parliament and member states which could take a few months.

The implementation of post-crisis EU rules have been plagued by political wrangling between the key European institutions, creating uncertainty for market participants.

Some Parliamentarians are unhappy with ESMA’s Mifid II technical standards, saying they have watered down their original laws.

Reporting by Michelle Price and Lisa Jucca; Editing by Muralikumar Anantharaman