The Markets in Financial Instruments Directive (MiFID) has made major progress in the past two months. The MiFID Joint Working Group (JWG) has actively promoted developments in standards and communications and MiFID Connect, a grouping of London based trade associations, is creating an implementation policy for both wholesale and retail to help their member firms. However JWG has recently lost founding member Fix Protocol Ltd and now the JWG IT subgroup is breaking away. Will this cooperative energy be lost?
Many industry change management specialists have now looked at the requirements and are beginning to debunk the views originally put forward that MiFID will be a huge and unnecessary cost to the industry. MiFID is essentially about best practices and, with some specialist exceptions such as systematic internalisers, there is little in it that a best-of-breed broker is not doing or striving to do. The challenge is in proving that these best practices are in place. Institutions are now beginning to see past the pessimism and are looking at the new requirements and at the significant benefits that MiFID could bring them. Now new support in understanding permissions, obligations and opportunities can be found in FSA’s quietly released work-in-progress draft guidance document on its MiFID web pages.
However not all smooth progress. The EC are keen that no country imposes extra rules (gold plating) as part of its national discretion. As highlighted in last week’s FT, this will cause problems for the FSA’s drive to unbundle commissions and to stop the use of soft commissions. Unbundling is not specifically mentioned in MiFID so the FSA has either to fight its corner for an exceptional national variation or drop the unbundling issue.
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