The Markets in Financial Instruments Directive (MiFID) is the current framework for the EU legislation that regulates firms and trading venues within Europe. It is being revised in order to reflect current regulatory priorities, in particular the lessons learnt from the financial crisis – hence MiFID II.
The comprehensive and wide-ranging reforms contained in MiFID II will have practical and strategic impacts across relevant firms at a Business, IT and Operations level. Some of the reforms will require material IT responses with potentially long lead times, while others will require significant changes to the way in which firms interact with clients, customers, markets and regulators.
The 3 January 2018 implementation date is approaching rapidly, leaving approximately six months for firms to complete their MiFID II training. This was one of the key talking points at the Eukleia event, MiFID II and Conduct Training – Where do we go from here?, which took place at the London Stock Exchange at the end of June 2017. An appropriate setting for a discussion on past and future trends in conduct training.
The MiFID II training challenge
The biggest challenge is perhaps the breadth of MiFID II and therefore the number of pieces in the MiFID II jigsaw. The best place to start is therefore to map these pieces to both your firm’s business model and your audience by carrying out a full training needs analysis.
Choosing the right approach for you
The next step is to allocate the training to your audience on the basis of what they need to know (and when). The approach that we suggest has three levels:
This is awareness-level training. It is aimed at making sure that employees know that MiFID II is coming, understand the main terminology and know broadly how the firm and the firm’s clients will be impacted.
The Small Picture
This targets impacted businesses and functions. This level of training is for employees who are actually going to have to do things differently, and focuses on specific business and operational impacts.
The Smaller Picture
This addresses the specific changes to policies and procedures. This is the detailed content and sets out what it is that firms and employees will have to do differently from January 3 next year.
Once the topics and levels of training have been identified, the next stage is to decide on the delivery channel. Here are our suggestions:
This can best be delivered via e-learning, an infographic or perhaps a video.
The Small Picture
For larger firms, this can best be delivered via a tailored elearning course using stranding (tailored core and advanced content addressed to specific employee groups selected by business, function, asset class etc.) to ensure that the right employees get the content they need. For smaller firms, classroom training may be appropriate.
The Smaller Picture
The detailed content at this level means that classroom delivery is likely to be the best option.
An off-the-shelf approach to MiFID II training
At Eukleia, we have assembled the pieces of the MiFID II jigsaw into four main topic headings.
Overview and impact on the firm
Includes background, aims and Implementation, Brexit and scope
Includes client classification, information to clients and costs, conflicts, inducements and research, investment advice, suitability and appropriateness
Market integrity and transparency
Includes trading venues and markets, position monitoring and reporting, pre- and post-trade transparency, algorithmic and high frequency trading, best execution and execution policies
Governance, systems and controls
Includes: records and recording, product governance and sales processes
The content of these chapters is by no means set in stone. Topics can be removed or relocated depending on the firm’s business model and focus.
The bigger picture: MiFID affects other training programmes
It’s worth noting that MiFID II training does not end with standalone MiFID II training programmes. Other existing courses may need to be updated, for example, courses on best execution, suitability and appropriateness. This is also a good opportunity to refresh current training and reinforce the messages in existing content.
A final word
At Eukleia, we are working with clients on a range of MiFID II training projects, including the simple overview provided by our off-the-shelf, awareness-level elearning course, tailored bespoke elearning training solutions and classroom engagements.
Click here to access the event presentation.