MiFID is a marathon not a sprint, and the rules of the race are becoming clear as we cross the start line. Eighty percent of the commercial market is now playing by a new set of rules and investment firms need to clear three main hurdles:

PJ Di Giammarino CEO JWG-IT Group Ltd

1. Customers have a new “bill of rights” that they, or those working on their behalf, may start using to their advantage. New detailed order handling rules should be implanted in financial institutions’ operating models and culture.

2. Traders will have to overcome unfamiliar obstacles to recognize new venues, adjusted market share league tables and revalued indices. Struggling trading models should be adjusted quickly, to avoid increased risk in volatile markets.

3. The raised governance bar around conflicts of interests, outsourcing, data security and record keeping will require a leap into new territory as regulators start to check for anomalies. An institution needs to know how “relatively red” its practices are before they do.

To run the race, at the right cost/income ratio, firms require controls that plot predicted versus actual trends over time. JWG-IT research shows there is a minimum of 16 MiFID measures. Relevant, timely and easily digestible metrics are the order of the day. In our recent research, ninety-five percent of firms anticipated fines during 2008 for non-compliance – if you are in the five percent, then there’s nothing to worry about!

www.jwg-it.eu
www.mifidgroup.com

Filed under: Issue 4 - Winter 07