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By Julian Goldsmith, 30 October 2007 13:32

NEWS

While large banks and exchanges are set to grow as a result of adopting MiFID (Markets in Financial Instruments Directive), small domestic players and private banks will get little from their investment.

According to the British Bankers Association (BBA), the City of London will be well placed to take advantage of the borders breaking down across Europe that the update to investment banking regulations is expected to achieve.

But financial organisations that operate on a purely domestic business model - which will still be required to adopt MiFID - will not share in this commercial strike.

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

A spokesman for the BBA told silicon.com: "MiFID rules will be imprinted into the Financial Services Authority rule book, so for smaller organisations, it's a question of dealing with regulatory changes as they have always had to do. However, as a small business with a domestic business model, they will be spending money which will effectively be of no benefit to them."

But the spokesman pointed out that although cross-border opportunities will only be open to big organisations, all financial institutions will benefit internally through the adoption of MiFID because it has forced them to break down silos and share data.

Similarly, private banks that operate in the wealth-management arena, face a significant amount of work and investment for an unclear benefit under the directives.

Sally Scutt, BBA deputy chief executive, said in a statement: "Under MiFID, private banking had to bring investment processes designed for wholesale activity together with comparatively small-scale individual clients. Wealthier clients will neither need nor want these new rules - certainly they will not want to be burdened with more warnings or documents."