Just 36% of financial services firms that are subject to MiFID II are confident they will be able to comply with the regulation by the January 2018 implementation date, according to corporate finance adviser Duff & Phelps.
The firm surveyed 183 senior financial services professionals, including compliance professionals and investment managers, across Europe, US and Asia.
It found that 89% of managers, brokers and banks foresee increasing costs due to regulation, with many suggesting compliance spend could more than double in the next five years.
Currently, respondents said they are typically spending 4% of total revenue on compliance, but this could more than double to 10% by 2022.
As many firms have already reported struggling with the burden of regulatory costs, the increase could mean two thirds of those surveyed are unable to meet the deadline.
The implementation date has already been extended by one year from January 2017 to allow firms to finalise their preparations.
In the UK, the Financial Conduct Authority (FCA) has allocated £9.2m to MiFID II, and advisers and asset managers will contribute to this. The actual figure will be calculated based on how much a company contributes to the FCA's annual funding requirements.
Firms also reported compliance costs were now having to factor in costs of regulatory fines and replacement staff, as well as implementing the regulations.
Julian Korek, global head of compliance and regulatory consulting at Duff & Phelps said he expects some firms to miss the MiFID II deadline.
"Skyrocketing costs mean that firms have had to decide which regulations to prioritise, meaning that some will miss the already extended MiFID II deadline.
"More guidance is needed from the regulator about how firms should allocate their time and money when complying with regulation, especially as the cost of Brexit, changes in US policy and cybercrime continue to emerge."
In a previous survey, Duff & Phelps also found that nearly nine out of ten (86%) financial services firms said they intend to increase the time and resources they spend on cybersecurity next year in anticipation of incoming regulation.
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