IT services company urges banks to plan resources early to avoid extra expense*
LONDON, 2 May 2006 - ZEDA, the IT services provider, is urging financial services companies to act on MiFID compliance sooner rather than later in order to save unnecessary costs. It warns that if banks leave it late to comply with the November 2007 deadline, there will be a squeeze on niche skills already in short supply, leading to an increase in staff ‘poaching’ and paying sky high costs for external consultants.
This warning follows reports of ignorance amongst IT directors within financial services institutions of the imminence of the regulation’s implementation and the system requirements it will entail. ZEDA is warning that not only will companies struggle to meet deadlines without proper planning, they could also face the prospect of failing to comply if plans and knowledge aren’t documented and communicated outside of the core implementation team.
Steve Tomlinson, Services Manager at ZEDA, comments: “Many companies are delaying their plans because much of the regulatory requirements of MiFID remain unclear. But rather than wait for the EU to publish definitive guidelines, firms have a lot to gain from acting quickly, even if it’s just planning the resources they’ll need. Many, for instance, do not realise that up to 25% of the total MiFID cost and time expenditure needs to be put aside for testing. Given the deadline is November 2007 that leaves us just over a year to get systems in place to allow for a 4-5 month testing period - the clock is ticking.”
“The advantages of complying early are two fold,” continues Tomlinson. “Firstly, it will enable businesses to acquire the skills and resources they need at a lower cost, before high demand pushes up salary expectations. Secondly, the reputational advantage achieved through proactive compliance will ultimately benefit the bottom line as shareholders and customers will look upon those companies more favourably.”
However, Tomlinson is quick to point out that it’s not enough to simply plan and acquire resources, but equally important that plans, skills and knowledge are cascaded down the company: “As the companies that are lagging behind in the race to comply start to panic, they are likely to start poaching skilled staff from their competitors, which could be fatal to a company whose knowledge of the system changes required has been limited to only a handful of employees.”