MiFID: The unanswered questions

Confusion continues to reign over the exact requirements of MiFID - and the implications of non-compliance - with just six months to go until the 1 November deadline.

The new European investment banking regulations have prompted firms to race to put the necessary technology and processes in place in time - but some elements of the regulations, such as best execution, remain unclear.

Chris Skinner, chairman of the Financial Services Club, told silicon.com: "We're 181 days way from 1 November and I think we're 365 days away from knowing what MiFID is about in practice."

As for the legal situation if companies are not compliant by November, Philip Buttifant, director of wholesale policy at the British Bankers Association (BBA), said: "It's really up in the air."

Cheat Sheets

♦ Basel II
♦ MiFID
♦ Sarbanes-Oxley

Ralph Silva, analyst at Tower Group, said: "I'm confident if tier-one banks aren't 100 per cent ready on day one that nothing will happen."

As long as banks can demonstrate they are working towards compliance, Silva believes the government and the European Union will not be keen to take action. "They're [government and the EU] going to have to work out who should be knocking on the door," he concluded.

Graham Titterington, analyst at Ovum, said: "It's more likely the effective pressure will come from customers than regulators."

Titterington said if customers realise they're not getting the best deals - something MiFID is aiming to reduce - they could potentially sue. "That will concentrate the mind," he added.

In general, it seems the UK financial industry is looking good to hit the November deadline and is ahead of other major European financial nations.

Silva said: "The UK is probably a bit ahead of the rest of Western Europe. The British banks are well suited to this - basically they're not scared. They're all generally in the same situation."

He rated UK MiFID readiness at eight or nine out of 10 and said the rest of Western Europe is at seven or eight.

The BBA's Buttifant said France and Germany are "definitely" going to be late in transposing MiFID to national law. "The UK is the only member state that's really significant in financial services to go on time," he added.