MiFID II – Day 2: What banks have to keep in mind - Banking blog

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While banks have deployed compliant MiFID II solutions, there are several cases where the implementations remain reliant on manual processes, in particular where requirements or interpretations changed at a late stage.

In this blog, we take a look at the road ahead and how a future-proof solution can be accomplished as part of the Day 2 activities. Focusing on the strategic optimization of the operating model and considering new technologies such as Process Mining, Robotic Process Automation (RPA), Big Data and Blockchain is crucial to gain efficiency while remaining fully MiFID II compliant.

Finalizing the implementation and setting a new focus

The new legislative framework Markets in Financial Instruments Directive II (MiFID II) came into force on 3 January 2018. As presented in our previous blog, the Financial Services (FS) sector is still in the stage of finalizing the implementation. While doing so, it has become important to look ahead and start focusing on other relevant Day 2 activities which include performing assurance and remediation activities as well as preparing for any regulatory remediation required as a result of regulatory inspections. More importantly though, is the definition and implemention of a strategic, future-proof solution for MiFID II.

Tackling the biggest challenges

A survey conducted among 15 Deloitte member firms in Europe on the go-live experience showed that Transaction Reporting and Trade Transparency were named as two topics where organizations experienced the most issues and challenges.

The implementation of the Transaction Reporting obligation had an extensive front-to-back impact on the banks’ processes, data and systems. Amongst others, challenges before the go-live were reported with regards to differing data and reporting requirements in addition to last minute changes from trading venues. Report reconciliation and gap identification as well as data clean-up exercises were named as significant Day 2 challenges in this area. Looking ahead, organizations should leverage momentum of MiFIR related activities, e.g., take advantage of clean-up exercises to improve efficiency and adjust outdated client on-boarding processes.

The root cause of issues with regards to Trade Transparency lay in the technical implementation and dependency on respective data and IT service providers that did not deliver in time and to the required quality. For Day 2, it is therefore important to review the technical solution and leverage new technologies to gain advantages such as increased process efficiency and productivity as well as mitigation of operational risks.

A strategic MiFID II solution

With the focus of organizations still being on replacing workarounds with more scalable solutions, the potential for improvement may be overlooked or identified only too late. To avoid this, defining and implementing a strategic solution is critical with organizations needing to pay special attention to the review and adjustment of the operating model.

The different layers of the operating model should be evaluated in relation to MiFID II. Amongst other things, three aspects should be prioritized with regard to selecting an effective and efficient operating model:

  1. Strategic opportunities and optimization 
    • Leveraging greater transparency to optimize business lines and products
    • Identifying commercial opportunities
    • Aligning people, processes, and infrastructure
  2. Automation
    • Eliminating manual workarounds which have been implemented to meet the go-live deadline in order to reduce cost of labor
    • Targeting larger scale automation to achieve scalability and optimization
  3. Efficiency and cost reduction
    • Performing critical process reviews to achieve stronger efficiencies via further improvements and rationalization
    • Setting up centralized systems and location specific strategies in order to minimize the cost of compliance

Technologies in focus

As a layer of the operating model the IT infrastructure has to be included in the assessment. Examples of technologies, which should be considered in the evaluation, include:

  1. Process Mining - In the area of process management, process mining is emerging as the missing link between model-based process analysis and data-oriented analysis techniques with the aim to improve understanding of processes and therefore increase process efficiency.
  2. Robotic Process Automation - Robotic Process Automation (RPA) uses software, commonly known as a ‘robot’, to capture and interpret existing IT applications to enable transaction processing, data manipulation and communication across multiple IT systems. RPA can be a good fit for mitigating operational risks on processes where the data required for new processes is not yet available in internal golden sources, e.g. venue classification, transaction cost analysis data. Furthermore, it can support reporting by accumulating data and identifying outliers, increasing productivity as well as efficiency.
  3. Big data - Leverage Big Data, machine learning and real-time market aggregation to generate business insights and diagnostics in support of Equity business and Fixed Income, Currencies and Commodities (FICC) trading on electronic platforms and associated controls.
  4. Blockchain - While still in it’s early stages, solutions based on the technological infrastructure and protocols of a blockchain allow simultaneous access, validation and record updating in an immutable manner within a network spread across multiple entities or locations. In the context of MiFID II, it is worth evaluating potential use cases that can considerably support compliance in an efficient and effective manner. Examples of use cases currently being assessed/developed include solutions around trade capture/management as well as solutions targeting a consensus for noncompetitive reference data (e.g. Legal Entity Identifier) which is essential for trade reporting purposes.

Using the moment and moving ahead

While the FS industry faced significant challenges for the go-live of MiFID II, it is becoming more important to further look ahead and plan for relevant Day 2 activities. Existing issues and challenges should be addressed with a long term view. The review of the operating model while considering shifting trends resulting from MiFID II is a first step. New technologies should be embraced to optimize the operating model and to strengthen operational efficiencies and increase ability to flexibly respond to future regulation e.g., FIDLEG.


  Sergio icruz

Sergio Cruz, Partner, Banking Operations Lead

Sergio is a specialist in Operational Transformation in banking with strong expertise in areas such as risk and regulatory driven transformation as well as finance and trading transformation. With over 20 years’ experience in financial services, his focus is on banking operations where he worked on several large assignments in Switzerland and abroad. Key clients include global banks in Switzerland and UK as well as private banks based in Switzerland.



Hugh Macquarrie, Director, Financial Services Transformation

Hugh is the Director leading Financial Services Transformation in Switzerland. Hugh has a background in industry and professional services roles over 15 years exclusively working in the Financial Services industry. Throughout a varied career, Hugh has worked extensively across the capital markets, wealth management and retail segments within banking and in the insurance industry. Over the last three years, Hugh has been responsible for the oversight and management of multiple projects in regulatory/ business transformation for global universal banks in Switzerland.



Thomas Wangler, Manager, Financial Services Transformation

Thomas is a Manager with 10 years of experience in the Financial Services Industry in the Strategy and Operations Team of Deloitte Consulting AG focusing on Banking Transformation. He has expertise as a Release and Project Manager with the focus on core banking software and a profound experience in the field of regulatory-driven change management, strategic banking transformation as well as target operating model design and implementation.



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