mifid 2 - report pdf version
TRANSCRIPT
MiFID II : What we know, recruitment trends and thoughts about the future
What is MiFID II and why is it delayed?
MiFID was initially enforced to ensure investor protection, promote competition, and improve transparency but subsequent events showed it was failing to meet all of its objectives. After the fall of Lehman Brothers and the 2008 financial crisis, MiFID II was introduced to expand the scope of MiFID and address some of its shortcomings12.
The European Parliament and EU national Governments passed the MiFID II legislation in early 2014. The EU published the final text in June that same year but it became clear that it was not sufficiently detailed to enable its implementation. Drafting a new version has fallen to the European Securities and Markets Authority (ESMA), however, the technical standards run to more than 1000 pages and the complexity, resourcing and budgetary constraints have impacted heavily on delivery of the new regulations3. One specific Project that is causing delays is the Financial Instrument Reference Data Project, which is unlikely to be delivered prior to the third quarter of 2017, with many other requirements being directly affected by the collection and analysis of this data4.
On February 11th the European Commission confirmed the delay in the implementation of the directive across the European Union, stating “It was to take into account the exceptional technical implementation challenges faced by regulators and market participants.” This means that MiFID II will now apply from January 3rd 2018. A spokesperson from the Financial Conduct Authority (FCA) added it wanted a successful implementation of the new rules and part of this means, “Having a realistic implementation timetable for both regulators and firms.” Also stating, “Despite the delay, firms need to continue to press ahead with their implementation work. There’s still a lot for them to do to be ready in time for the new implementation date5.” Harry Eddis, a financial-regulation partner at Linklaters, also shared this sentiment, suggesting that while the delay is welcomed, the industry as a whole still faces a race against the clock to get everything in place before the deadline6.
Current hiring trends for MiFID II : Contract positions dominate hiring practices
Due to the nature of the skills shortage in regulatory work, a large proportion of the hiring for MiFID II is contract based, as contractual work is more lucrative for contractors with these niche skills. Contract hires tend to be for between six and twelve months depending on the type and size of the business and the seniority of the position.
There is a small amount of permanent hiring, but this makes up a very limited percentage of regulatory hiring in relation to MiFID II and is focused on the more senior end of the spectrum, with a number of large institutions choosing to hire some Project Directors and Project Managers on a permanent basis, to ensure continuity of product delivery.
Skills in demand
Skills in demand
Business Analysts and Project Managers tend to be either business or technically focused, with the technical aspects relating to the IT and reporting systems. These business centric or technically focused teams are normally either interwoven or interworking, depending on the regulatory team’s structure within the company.
Due to the number of changes proposed by MiFID II, regulatory teams need to communicate with upper and lower management, traders and back office staff, as well as producing technical functionality specifications, including, designing and modifying reporting and recording systems. Hence the requirements for both business and technically focused Business Analysts and Project Managers.
In terms of regulatory experience, as MiFID II is yet to come into force, hiring is done in relation to previous regulatory implementation experience. Often, regulatory specialists have experience with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank) or the European Market Infrastructure Regulation (EMIR). This is due to the large effect both regulations had on the Financial Markets, which gives the regulatory specialists the necessary experience in the large scale reforms that are required for compliance with MiFID II.
In regard to Software Developers, the necessary skills and experience needed often changes in reference to the programing language and stack used by that company. However, there are a number of common skills that are often found in regulatory software developers. The first is the use of multithreading as this allows developers to generate and produce systems more quickly as well as enabling multiple activities to work concurrently in the same program7.
The second is their use of agile testing to test for bugs and minor problems during the development stage, reducing the amount of time needed to develop new systems or change existing systems to make them MiFID II compliant. From our holistic position in the market, we have also seen a surge in demand for Scala developers, forcing day rates up to around £650 to £700 per day.
0 200 400 600 800
BA's with regulatoryExperience
PM's with RegulatoryExperience
Developer's with RegulatoryExperience
High Low
Pay scales of BA's and PM's and Developer's with Regulatory
Experience (Day Rate)
What does the future hold?
Even though the MiFID II implementation date has been delayed to January 3rd 2018, we don’t expect hiring for MiFID II compliance to slow down. At Huxley, we believe that it is likely the FCA will reduce the grace period, or remove the grace period altogether after the regulation has come into force, as businesses now have had extra time to ensure compliance8. Also, due to the number of regulations that require large scale changes for compliance with MiFID II we expect hiring to continue at its current pace for at least the next 12 months, allowing contractor day rates to stay at a similar level.
Thoughts and opinions from the Industry
“It will be interesting to see if the large institutions will be fully prepared for MiFID II and are able to meet their obligations proactively rather than reactively as was often the case for earlier regulatory projects.” - Regulatory Client Communications Analyst, Investment Bank.
“Due to the delay in MiFID II implementation, businesses have become more relaxed about their implementation timelines, but within a year will be as panicked as they were October last year. I think, they will wait until the deadline before making sure their recording systems and services are compliant”. - MiFID II Business Analyst, Investment Bank.
“I think that the current rates for contractors will stay around the same level, even approaching the deadline, as more contractors will have direct MiFID II regulatory experience, keeping the price competitive.” - MiFID II Business Analyst, Investment Bank.
“Given the costs involved in upgrading / modifying systems and the significant increase in trade reporting, it could also be argued that it’s unfair on firms operating within Britain, to have to invest large amounts of capital on improvements when no one is sure what effect a Brexit may have on regulations within Banking and Financial Services.” - Regulatory Change Team lead, Investment Bank.
“The simple answer to what the effects of MiFID II will be on large financial institutions and boutiques, is rising costs. Smaller companies will be hesitant of the increased execution costs, as they will want to keep their current client base. While the large financial institutions will find that a lot of the overall costs will be difficult to pass onto their clients if they want to remain competitive.” - MiFID II Business Analyst, Investment Bank.
“Looking to the future, it is also important to consider that we are still awaiting clarity on several issues from ESMA, which could impact workload, as well as dictate the necessary personal requirements for compliance.” MiFID II Project Manager, Investment Bank.
“These are early days in MiFID II implementation. However, it is substantially different from previous regulations, as is a lot broader in scope. It not only effects tech reporting, but across the board into management and at all levels and processes.” Business Analyst/Regulatory Software Developer, Investment Bank.
1. MiFID 2 and the new trading landscape – Transforming trading and transparency in EU capital markets, 2014, Deloitte, ECRS EMEA Centre for Regulatory Strategy -http://www2.deloitte.com/uk/en/pages/financial-services/articles/mifid-ii-and-the-new-trading-landscape.html
2. MiFID – what is it, and what does it mean?, February 2012, KPMG -https://www.kpmg.com/BE/en/IssuesAndInsights/.../MiFID-what-is-it.pdf
3. What is ‘Mifid’ and why care about its delay?, November 2015, Financial Times – Jim Brunsden and Philip Stafford - http://www.ft.com/cms/s/0/77d46b66-87aa-11e5-90de-f44762bf9896.html#axzz3xrmDLEX9
4. A quick insight of potential MiFID delay, 4th Jan 2016, Abide Financial, Chris Dingley -http://www.abide-financial.com/mifid-ii-mifir-library/a-quick-insight-of-potential-mifid-ii-delay-by-abides-chris-dingley-2/
5. FCA on what Mifid II delay means for industry, Feb 11th 2016, FT Adviser, Peter Walker -http://www.ftadviser.com/2016/02/11/regulation/eu-legislation/fca-on-what-mifid-ii-delay-means-for-industry-JRseZEc3Vs8UD8F2e78QYK/article.html
6. EU Plans 1-Year Extension of MiFID II Market Rule Start Date, Feb 10th 2016, BloombergBuisness, Julia-Ambra Verlaine -http://www.bloomberg.com/news/articles/2016-02-10/eu-plans-1-year-extension-of-mifid-ii-market-rule-starting-date-ikgo754c
7. Introduction to Java Threads, Javaworld, Donald Drake, 2016, -http://www.javaworld.com/article/2077138/java-concurrency/introduction-to-java-threads.html
8. The Dangers of a MiFID II Delay, January 2016, Sapient Global Markets, Cian O’ Braonain -http://www.sapient.com/en-us/global-markets/blog/2016/01/the_dangers_of_amif.html
Footnotes
Key Contacts
For more information about contractual recruitment please contact:
Daniel NavazeshBusiness Manager Contract SalesEmail: [email protected] Number: 0207 469 5151
This report has been written by consultants that are market specialists actively working within this market, as part of a market intelligence drive to inform businesses and professionals within the regulatory change space.
Research conducted by Alexander Goodwin.Email: [email protected] Number: 0207 469 5151
For more information about permanentrecruitment please contact;
Sachin GuptaBusiness Manager Permanent SalesEmail: [email protected] Number: 0207 469 5151
Alexander Goodwin – ResearcherEmail: [email protected] Number: 0207 469 5151
Alexander Goodwin – ResearcherEmail: [email protected] Number: 0207 469 5151