Aaron Lipeles, the global head of service transformation at Excelian Luxoft, a compliance IT outsourcer, speaks about the state of readiness at firms in relation to the European Union's Markets in Financial Instruments Directve, especially in relation to fixed income.

He told Compliance Matters: "Our large clients all have implemented MiFID II programmes, but they're still a work in progress. Given the state of these programmes many, if not most, are going to have trouble meeting the deadlines.

“The problem banks are having isn’t in getting a system together that sends the data to the regulators; that’s the easy part. The hard part is with specific problems in departments like fixed income, where almost two-thirds of trades are still done by voice.

“Traders still make trades over the phone in an ad-hoc way. A trader jotting the details on a slip of paper and handing it to an assistant is not going to cut it with the regulator from next year. A bank will have to report every trade to the regulator within 15 minutes, so there is frankly still a huge amount of effort ahead for the industry. These challenges may or may not be framed under the MiFID II umbrella. They’re often called something like ‘trading system remediation’ or ‘data quality improvement’.

“Secondly, MiFID II will usher in a new age of price transparency in fixed income. Buy-side firms in particular will have information about deals to the very lowest level, even with structured products. The big winners will be those who make this information available to their traders and then their clients quickly.”