More than half of firms do not see any 'obvious benefits' in the Markets in Financial Instruments Directive, according to research from the Financial Services Authority.
The FSA has published a paper setting out its assessment of the overall costs and benefits for the financial services industry of implementing MiFID in the UK.
Its survey of firms reveals more than half do not identify any obvious benefits from MiFID and it says there is a “reasonable level of pessimism in firms’ perceptions regarding MiFID”.
The highest cost impacts identified by firms are in areas of best execution, client categorization, systems and controls and the introduction of the appropriateness test for non-advised sales.
The FSA estimates the one-off cost of implementing MiFID could be between £870m and £1bn, with ongoing costs of around an extra £100m a year.
It says the main benefits of MiFID will probably arise through reduced costs of compliance and transactions costs, as well as more liquid capital markets.
A substantial percentage of firms affected by MiFID say they have not yet budgeted for its implementation (52%), or do not know if they have (23%).
Hector Sants, managing director for wholesale and institutional markets at the FSA, says: “It is in the nature of regulation that costs are relatively easier to define and quantify for firms, while benefits can be harder to pin down. As we have already foreshadowed, it is clear that implementation of MiFID represents a substantial cost to industry particularly in the upfront years, but it does create the potential for revenue opportunities over the longer term. We would encourage firms to focus on these opportunities.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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