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By Tim Ferguson, 13 July 2007 08:12

NEWS

The European investment bank directive MiFID will have a significant impact on the financial services industry long after it comes into law on 1 November 2007.

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 financial trades.

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

Speaking at a BT and Bearing Point-sponsored MiFID event in London this week, Geert Vanderbeke, European head of sales for brokerage, clearing and custody at Fortis Merchant and Private Banking, said: "1 November is not the destination, it's the beginning of a new journey."

John Lowrey, head of European electronic client services and statistical arbitrage at Lehman Brothers, said: "MiFID will have unintended consequences. It is that big."

He added that if banks are not focused on the long term implications of MiFID they're "missing the point".

But Lowrey also suggested that although the impact of MiFID will be profound, it will happen over time. "Come 1 November, the sky will not turn green," he said.

Perhaps the greatest impact of MiFID will be in boosting competition within Europe.

Lowrey said: "MiFID at a high level is an extremely important set of regulations. This is the EU's answer to 'how are we going to compete?'. MiFID forces competition, period."

Fortis Merchant's Vanderbeke said: "It's about competition - it's about a level playing field."

Lowrey also suggested best execution - essentially getting the best value deal on trades - which forms a major part of MiFID, is something investment bankers are already doing.

Chris Pickles, manager in industry relations at BT Global Financial Services and chairman of the MiFID Joint Working Group, said: "Best execution is one thing that has been on the MiFID agenda from the beginning."