“Even with the deadline in plain sight, there are still changes to be addressed, from middle and back office changes, capital market issues and middle office clearing. Firms will likely still be asking “am I ready?” on the implementation date.
“Evolution will be ongoing in 2018 as the FCA continues to refine certain aspects of the regulation, particularly where any unintended consequences transpire. But the good news is that the pain process will have passed. With the ground work all in place, companies will be able to action refinements much more quickly and easily.
“For equity markets, there will be no big bang, but a smooth ongoing transition. Transparency requirements will increasingly put pressure on liquidity with market gridlock a potential outcome. We’re only just at the beginning of a decade of change in the fixed income markets. Fundamental market data will be more plentiful and cheaper to access in a year and beyond. Brexit will also be at the centre of everyone’s thinking and could result in a divergence of regulations, priorities and resources.
“We’ll be looking at a more unsettled market for the consumption of research in the year ahead. In fintech we may well see disruption, and a more focused landscape led by best of breed vendors. The buy side will benefit from more aggressive pricing and more fintech innovation in reaction to less than perfect developments in 2017.
“Finally, what will regulators’ risk appetite be in various jurisdictions? Certainly, there will at least a few fines levied by the FCA. Firms will need a well-run MiFID II compliance programme and those who don’t have forbearance will be fined. The FCA’s best execution review is still alive and kicking and non-compliance is not an option.”
Matt Gibbs is product manager at Linedata