Investment banks have the necessary IT expertise in-house to make the system alterations needed to prepare for the Markets in Financial Instruments Directive (Mifid), the UK CIO of a leading European bank has claimed.
With concerns voiced in many quarters at the likely IT burden posed by Mifid, Damian Atkinson, CIO at ING's UK operation, said the challenge was manageable and banks were unlikely to need outside help.
Every bank in Europe that sells financial instruments, such as equities and bonds, has to comply with Mifid by 1 November 2007.
Atkinson told bankers at the SunLive Financial Services 2006 conference, "Unless your infrastructure is old and disaggregated, your incremental costs are likely to be contained. You are more than likely going to adapt what you have got."
He said banks thought they would spend less on implementing Mifid than they did on either Y2K or the euro.
But Atkinson did warn that banks would still have to make major changes both to their business strategies and their IT systems.
Mifid's requirement that banks should trade at the best price available on any market in Europe would be the most challenging to implement and the one that compliance departments would find hardest to prove, Atkinson said.
"There are 101 definitions of best execution and best execution management. You need to be able to prove you have done this."
The directive demands that banks overhaul their order-routing systems to trade at the best possible price, and be able to prove they have done so. Both investment banks and new markets will be able to execute trades without using Europe's 21 stock exchanges, so order-routing systems will have to link to many more markets.
Under Mifid, banks will also have to publish all the trades that take place in the market, and Atkinson warned, "You may well need to upgrade your networks to cope with very low levels of latency [delays in processing time] if you are to be an alternative venue for trading."