The Securities and Investment Institute has warned financial services companies may be overwhelmed by MiFID, Europe's new set of rules for doing investment business.
While the Markets in Financial Instruments Directive may give additional freedoms to firms, it is also the case it will place greater emphasis on the responsibilities of senior executives – who will be in the firing line of new Conduct of Business rules.
These are yet to be formulated by the FSA, although consultations are expected in the next few months once details of the wording of the directive have been finalised at the European level.
However, nobody in the industry should be complacent about what is the biggest change in regulation since N2, which marked the introduction of the Financial Services and Markets Act 2000.
The scale of the effects of MiFID mean it should be seen as an enterprise-wide issue, not just a compliance one, says Simon Culhan, chief executive of the SII.
”Our members are becoming aware of the significant amount of work involved.”
Project management plans need to be drawn up now to give firms a chance of comfortably meeting the MiFID deadline of April 2007. Areas of consideration include client classification, customer agreements, transaction reporting, and best execution systems and controls. All come with significant IT implications the SII adds.
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