By Tim Ferguson, 25 January 2007 14:45
NEWS
Investment banks are turning to automated trading systems to get ready for the rapidly approaching MiFID deadline.
Projects to address the demands of the new European finance regulations are stepping up a gear with the deadline now less than a year away.
MiFID requires companies to practice best execution when trading - where issues such as price, venue, cost and speed are all considered.
Speaking at a the Finexpo conference in London, Deutsche Bank's European head of automated trading, Andrew Morgan, said: "In Europe in particular we have MiFID on the way this year and this will have a major impact on our business."
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He added: "Coming back after the [Christmas] vacation there has clearly been a change in priorities. Right now all the smart clients are thinking about it [MiFID]."
Algorithmic trading systems already take some of these issues into account and the looming deadline is likely to make this type of trading more interesting to investment banks.
At present the US is at the forefront of the algorithmic trading but Europe is "slower off the blocks but catching up fast", said Morgan.
The systems also provide clear audit trails which banks will need to meet the MiFID requirement to publish more trade information and retain records for five years.
This confirms the 'wait and see' approach taken by many organisations in the City until now.
The importance of algorithmic trading was further emphasised by Richard Balarkas, head of advanced execution services sales at Credit Suisse.
He said: "Algos are absolutely essential, you can't trade without them."
MiFID comes into force on 1 November - and analysts have suggested banks need to work sooner rather than later to keep costs down in meeting MiFID guidelines.
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