Firms count the cost as MiFID II comes into force

The biggest market reform in over a decade - the Markets in Financial Instruments Directive (MiFID II) - came into force on 3 January.

It’s estimated that a cool 2.5 billion euros was spent on preparation for MiFID II and that a further 700 million euros a year will be spent by the industry on staying compliant according Optimus consultancy.

 

These costs account for just one, albeit sizeable, piece of legislation showing just how significant the costs of regulatory compliance have become. The cost has typically escalated by more than 10% a year for firms and is estimated to account for 20% of large financial institutions’ budgets. What does this mean for the industry?

 

Simon New - Group Executive, Strategy

“While compliance is part and parcel of running a successful advisory business, the impacts are being felt and firms are counting the cost. It’s why we’re seeing advances in regulation technology, also known as RegTech, answering a massive need to control costs and introduce efficiencies.

Firms should identify the areas where they can better manage the costs  of compliance, and where using integrated technology can meet changing regulations while keeping costs down."

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