Britain Is Ready to Go with Mifid but Too Many Others Are Lagging; Efficiency Driver: Commissioner Charles McCreevey Says Mifid Will Encourage Competition in EU Securities Trading

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WE ARE as ready as we'll ever be; that's a lot better than most otherEuropean countries can claim to be," said a leading investment banker of thenew continent-wide rules on trading shares, bonds and derivatives which cameinto force today.

Seven years in the making and 18 months later than it was originally meant tobe in force, the EU's Markets in Financial Instruments Directive became law atmidnight. But in effect, while a handful of countries, notably the UK, arepretty much fully compliant with the directive, many are nowhere near and asmall group have yet to sign up to it.

The directive covers the 27 members of the EU plus the three members of theEuropean Free Trade AreaNorway, Iceland and Liechtenstein. By the first deadline of 31 January thisyear, when countries were meant to have incorporated Mifid into their own laws,only the UK, Ireland and Romania were ready.

Today the European Commission reckons that a third of all countries are stilllagging behind, including the Czech Republic, Estonia, Finland, Greece,Hungary, Malta, the Netherlands, Poland, Spain and Slovenia.

As one senior UK regulator put it: "Plenty of countries have ticked the box butthere's no way they are actually ready." Mifid is designed to improvecross-border trading, protect investors, make it easier for rival tradingplatforms to compete with existing national stock exchanges and eventuallylower the cost for companies raising capital, either through shares or bonds,by between 0.4% and 0.5%. The EU reckons it should eventually boost economicgrowth across the region by 1.1%.

Its implementation is expected to cost financial firms across Europe up to e 6billion, with London-based firms picking up the largest billpossibly approaching [pounds sterling]1 billion.

On average London firms will have spent around [pounds sterling]35 million each on new orupgraded technology. The key areas they have had to address is the ability toprove best execution for their clients and full transparency in the pricing ofinstruments in which they trade.

Charlie McCreevey, the EU Commissioner in charge of the directive, claims itwill "transform the landscape for the trading of securities and also introducemuch-needed competition and efficiency." Others believe it will some timebefore anything of the sort is the case. One major UK broking firm's head said:"The UK is well prepared but it's a question of how committed are othercountries which have signed up.

"Will they stick to the letter of the law? Trading will change but it will takeyears for all the markets to really open up. Until then it's still caveatemptor. …


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