Case Study – MiFID II

The Challenge

MiFID II, which came into effect January 2018, presented a significant challenge for firms to first understand and then address. Duff & Phelps saw this as an ideal opportunity to leverage technology and develop a collaborative, centralised, multi-user web-based application that would not only enable firms to navigate the lengthy and highly complex MiFID II legislation, but to conduct their own analysis of how MiFID II affected them and develop a series of prioritised tasks to achieve compliance.

Ian Manson, Managing Director in the Compliance and Regulatory Consulting (CRC) practice at Duff & Phelps, who was responsible for the client management and consulting engagements of affected firms, said, “Building a MiFID II tool was a new venture into FinTech for Duff & Phelps’ CRC. Clearly the process was a steep learning curve for my team but it was a very important step for us to use technology to simplify a daunting implementation project for our clients.”

Watch the launch video here.

The Solution

Choosing to work with Mettis due to their customer orientated and solutions driven culture, streamlining all aspects of development to simplify the complex MIFID II compliance challenges, Ian commented that, “We found Mettis to be flexible, very responsive and friendly. Also, importantly, their South African development base presented no issues simply because they operate in the same time zone.” when asked about the advantages of working with Mettis.

The application would have to contain all relevant elements of the MiFID II legislation and guidance in one easy to navigate application, including the following:

  • A simple design for data capture with visual communication of the compliance gap
  • Allow firms to assess their state of readiness
  • A ‘traffic light’ system and dashboards to illustrate progress towards compliance
  • Easily export output to Excel or other applications for inclusion in board reports or other MI
  • An online regulatory reference library
  • Enable changes as new guidance and Q&A were issued, keeping it up-to-date for clients

When Nick Bayley, a managing director within Duff & Phelps’ Compliance and Regulatory Consulting practice, met the Mettis team with circa 1,500 pages of MiFID II legislation, it became clear how complex and challenging the task of assessing MIFID II’s impact would be for a firm, let alone prioritising the tasks to achieve compliance, or monitor implementation progress.

However, by easily structuring regulatory and compliance requirements, policies, best practice or transaction reporting rules for their ‘fit-for-purpose’ Metior technology, Mettis was able to leverage Metior’s highly configurable cloud-based architecture for rapid development. With the project commencing May 2016, Mettis used their data and business rules skill-set to combine Duff & Phelp’s MiFID II domain expertise with Metior, to develop MAST: MiFID II Analyser Solution and Tracker, which was launched early December 2016, a mere six months later.

Furthermore, the application was built and deployed without the cost and complexity of buying or managing the underlying software on which Metior resides, with development, hardware management, security and hosting services included on a platform-as-a-service (PaaS) basis.

The Result

Duff & Phelps was able to offer clients a web-based application offering more than a repository of all relevant legislation, allowing them to:

  • Access initial profiles based on firm types e.g. MiFID firms and AIFMs
  • Undertake more detailed profiling based on particular business activities e.g. algorithmic trading or holding client assets
  • Initial and detailed profiling stages remove non-applicable sections of legislation
  • Results in a tailored tool based on the activities undertaken by the firm type
  • Understand the nature and impact of the MiFID II changes on the firm
  • Produce prioritized lists of tasks to enable the firm to achieve full compliance
  • Monitor the firm’s progress in implementing the necessary changes

An additional advantage of MAST was that the data and analysis it contained could be seen by both the firm and their designated Duff & Phelps compliance consultants. This provided the option for the firm to undertake all of the analysis, and if required, have it reviewed by Duff & Phelps, or have Duff & Phelps undertake the initial analysis, see the results in the system and use the outputs to formulate their action plan.

MAST pricing varied depending on firm type, and was available with an up-front annual charge and a modest monthly retainer to reflect the fact that the application would be kept up-to-date as further guidance was provided by ESMA and FCA up to and beyond January 2018. As of June 2019, MAST: MiFID II Analyser Solution and Tracker was still active, providing firms access to all results, reports and tasks for audit and reference purposes.

In closing, Ian added, “We were delighted with the range and types of users that selected MAST; including both longstanding clients and very large firms we had not dealt with previously.”