(Bloomberg) -- A one-year delay of the European Union financial-market rules known as MiFID II is needed to allow banks and other companies to beef up their IT systems to comply with the law’s intense data-reporting requirements, according to a European Commission document.
Pushing back the law’s start date to 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 time frame excessively -- and hence relax the implementation speed,” according to the undated commission document prepared for technical meetings and obtained by Bloomberg.
The EU’s market-legislation revamp, approved in 2014, is a centerpiece of efforts to shore up regulation following the financial crisis of 2008. Industry groups have pushed for a delay, arguing that companies needed more time to adapt to the sweeping changes, many of which entail extensive technical refitting.
The European Securities and Markets Authority seeks a “targeted” delay, “only related to IT systems,” ESMA Chair Steven Maijoor said earlier this month. The commission poured cold water on that idea in the paper.
A partial postponement of the vast law, which affects nearly every financial firm operating in the 28-nation bloc, from giants like Deutsche Bank AG and Goldman Sachs Group Inc. to small hedge funds, would be “generally not feasible” because of its complexity and scope, the document states.
“MiFID contains distinct chapters with different objectives, but where the implementation framework is very much interlinked,” according to the document. “The ramifications of the IT delay go well beyond the immediate areas concerned; virtually all key areas are concerned, either directly or through further knock-on effects.”
The commission, the EU’s executive arm, is currently in discussions on the issue with the European Parliament and the Council of the European Union, which represents EU member states. Both bodies would have to approve a delay.
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