As temperatures soar around the country and June looks as though it might at last live up to its reputation, the investment industry waits with bated breath for two documents that will be key to life in 2018.
As all except the hermit community are aware, MiFID II comes into force on 3rd January 2018 and the EU instructs all countries in the Union to have firm requirements for the implementation of MiFID II in place by 3rd July. As such requirements are not yet published in the UK, two weeks remain for FCA to comply, as it has undertaken to do. This will provide the industry with six months in which to make an extensive series of changes to its working practices, some large, some small. Among the larger and more fundamental changes is the obligation to price and supply execution and research services separately. It remains open to some doubt whether bond market practitioners will be able to meet this requirement by year end. The Policy Statement, when published, will, in theory at least, be the last regulatory word on the matter, prior to implementation. The industry may be able to contain its excitement while it waits; we will have to wait to see whether it can contain its exasperation once the requirements are set in stone.
The other source of anorak frisson is the impending extension of the Senior Managers and Certification Regime to all sectors of the industry. This regulatory measure, driven unusually by Parliament itself, will shift the balance of responsibility for compliance with regulations from corporate entities, including boards, to individual senior managers. That shift will take place on an unspecified date in 2018, but the draft requirements have been promised by FCA in Q2 – that is to say, any time in the forthcoming fortnight. The regime, we are promised, will be clear, simple and proportionate. The question is what will proportionality look like. We do not have long to wait before we find out.