MiFID II Spending and Solutions Landscape

Executive Summary

Complying with MiFID II will be a pricey exercise, with total implementation costs exceeding €2.5 billion. This bill will remain high, with over €700 million required to maintain compliance annually over the next five years.

FIGURE 1. INDUSTRY SPEND ON INITIAL MIFID II IMPLEMENTATION

Source: Opimas Analysis

The largest tier one banks will each spend in excess of €40 million to comply with MiFID II. Although second and third tier banks will spend only about a fifth each compared to their larger competitors, their numbers ensure that they will bear over half of the burden of implementing MiFID II. While many asset managers will be required to implement a reporting infrastructure for the first time, they will spend far less than banks, who will account for over 80% of spending (Figure 1).

While point solutions abound, few offer a comprehensive solution across trade reporting, transaction reporting, and communications monitoring (Figure 2). Bloomberg offers the broadest range of coverage, spanning all three areas, while several players are offering combined trade and transaction reporting services – notably the large exchanges, Deutsche Börse, London Stock Exchange Group, and Nasdaq.

As most affected asset managers need to build MiFID infrastructure from the ground up, providers playing across multiple categories are best positioned to scoop up this group’s expected €350 million initial compliance spend (Figure 2).

FIGURE 2. RANGE OF OFFERINGS OF SOLUTION PROVIDERS (1)