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MiFID: Banks not ready as deadline looms
Still miffed about regs...

By Tim Ferguson

Published: Wednesday 17 October 2007

A significant proportion of financial organisations are unprepared for the record keeping requirements of MiFID, just weeks before the European investment banking regulations come into force on 1 November.

MiFID - the Markets in Financial Instruments Directive - is a set of regulations to update the way investment banks do business by, among other things, improving record keeping and promoting best execution for trades.

According to research by the independent think tank JWG-IT, 64 per cent of companies surveyed will have a problem conforming with Article 51 of MiFID.

Read more about how MiFID is shaking up the financial industry

♦ Cheat Sheet: MiFID
♦ MiFID: The unanswered questions
♦ FSA upgrades tech to improve MiFID monitoring
♦ MiFID compliance - regulators in the spotlight
♦ Barclays Capital prepares as MiFID looms
♦ Banks gang up for MiFID reporting

Article 51 states banks must be able to prove - for up to five years - that they conformed with requirements agreed with clients for each individual trade. It also states customer records on rights and obligations need to be retained for the lifetime of their relationship with the bank.

But many companies suggest they are unable to reconstruct events after a trade in a suitable timeframe or at a reasonable cost.

PJ Di Giammarino, CEO of JWG-IT, said if organisations get caught out it could cost them hundreds of thousands of euros in fines.

But with so many institutions claiming they won't be ready, Di Giammarino acknowledged MiFID is a "marathon not a sprint".

The JWG-IT helps financial institutions to work out how to meet the challenges posed by EU regulatory changes and has identified 10 record keeping scenarios to test a business' overall MiFID readiness.

These include capturing customer classification information across all communication channels and proving non-preferential treatment and best execution.