IT directors in financial services are finally getting
to grips with the European Commission's proposals for the Markets
in Financial Instruments Directive (MiFID).
The level-two draft, which was put out last week, contains some
significant clarifications from earlier proposals, including the
decision to make some key requirements - such as best execution,
order handling and conduct-of-business standards - directives
rather than regulations.
The move allows for a greater degree of discretion in
implementation, as well as a more relaxed evolution into national
law.
Paul Beech of Atos Consulting said IT heads of investment banks
and other affected businesses would also be relieved to see the
removal of certain requirements that featured in earlier drafts -
particularly voice recording.
But he warned that despite the changes, the potential increase
in infrastructure outlay could still cost affected UK businesses
over £1bn.
Beech also emphasised the significance of the Commission's
observation that "the first movers and the better prepared will be
the winners" in the new, single European market for financial
instruments that MiFID will create.
His warning echoed that of Bob Fuller, co-chair of the MiFID IT
Joint Working Group, who told industry leaders late last month that
the legislation was "not a box-ticking exercise", but would "change
and modify trading behaviour over time."
Fuller said the striking thing about MiFID was that many of the
technical and logistical challenges firms were likely to face were
not predictable, and not even explicitly contained in the
legislation.
He said it was important that businesses focus their attention
on MiFID and try to predict how it might change the European
financial services landscape when it comes into force in November
2007.