FSA warns to prepare for MiFID

The UK Financial Services Authority (FSA) is urging companies to prepare for European compliance laws that are set to cost the banking industry $1bn in IT renewals.

The FSA is asking financial companies to prepare for the European Union's Markets in Financial Instruments Directive (MiFID) – a regulation that will allow companies to provide services across borders and establish branches in other European states.

MiFID is planned to come into effect in the UK on 1 November, 2007. However, the FSA said it is unsure of the legal implications as the EU is still debating the regulation.

In a statement, Hector Sants, FSA managing director for wholesale business, said: "The implementation of the directive is a major challenge, both for the FSA and for industry and, while November 2007 may seem a long way off, preparing to meet the challenge cannot begin soon enough."

The remarks come as the FSA today published a MiFID guide for companies to follow.

Earlier this year, the FSA criticised the EU for imposing MiFID without carrying out a cost-benefit analysis.

Market analyst Tower Group believes that IT investment could exceed $1bn across the financial industry for companies to meet.