New survey reveals more than two-thirds of sell-side investment firms are not ready for MiFID

London, 31 October 2005- A new research report, The MiFID Readiness Survey, produced by the MiFID Joint Working Group (JWG), reveals that more than two-thirds of investment firms surveyed do not have – or do not know if they have - a MiFID compliance framework in place.

Sponsored by Standard & Poor’s, Oracle UK and BT Radianz, the research, which canvassed the views of 35 London based investment houses, measures the state of readiness amongst these firms to meet the demands of MiFID. It also sets out to determine how these firms are seeking to address the technology hurdles posed by MiFID.

Key findings of the survey include:

- Almost half of the participants have started budgeting for MiFID technology projects in 2006; and 60 per cent of respondents have assigned full time staff to work on developing MiFID compliance frameworks.

- Despite the challenges posed by MiFID in terms of operational risk and continuous availability of service, 80 per cent of the participants in this survey do not know if they have a technology strategy in place appropriate for pre- and post-trade processing of shares traded outside the regulated markets.

- More than two-thirds of respondents are unsure how they are going to manage the pre- and post-trade data publishing obligations that are required by MiFID Articles 27 and 28.

This survey is the first that the MiFID JWG has undertaken. As the detail on MiFID becomes clearer, the JWG plans to roll out similar research amongst hedge funds, the Tier 2 & 3 broker/dealers and market participants across the EU.

MiFID, which now is expected to be transposed into national legislation and regulation by 31 January 2007, with the full implementation date now expected to be with effect from 1 November 2007, requires a broad level of organisational and business process transformation. The directive will apply to all investment firms operating in the EU and the EEA.

Commenting on these findings, Bob Fuller, Co Chair of the IT Subject Group of the MiFID JWG, said, "As awareness of MiFID gathers momentum, we felt that it was crucial to track investment firms’ readiness for MiFID. This research will help firms to compare their own state of readiness with their peers as well as provide us with valuable insights for our discussions with the European Commission and the FSA. The findings of our first survey demonstrate that getting ready for MiFID is far from ‘job done’ and the more one looks into the detail the more questions are raised as to what being ready really involves. However it is encouraging that firms are already thinking about the next steps by allocating resources to tackle the technology challenges posed by this directive."

Darren Purcell, Associate Director for European Securities Classifications at Standard & Poor’s, said, "The survey highlights instrument identifiers and the mapping issues that surround them as an obvious problem for companies complying with MiFID. As a leading provider of securities reference data, Standard & Poor's will use its experience in this field to listen and work with the industry to develop solutions to help firms fulfil their MiFID obligations."

Nigel Matthews, Head of Capital Markets at Oracle UK, pointed out that many investment firms will recognise MiFID as an opportunity to improve business performance and transparency. Mr Matthews added, "MiFID clearly creates new IT challenges particularly in respect of the increased information volumes and complexity of relationships, the enterprise-wide control of information auditability, integrity, quality and security, as well as increased complexity of information lifecycles. Oracle will be assisting these organisations with a coordinated, strategic approach to information management in order to protect existing IT investments, achieve sustainable compliance and secure competitive advantage."

Chris Pickles, Manager, Industry Relations at BT Radianz and Chairman of the MiFID JWG, said, “We recognise the pressure on the entire financial services industry to take a long hard look at how best to ensure that information flows efficiently among execution venues, data vendors and market participants in anticipation of the demands of MiFID. We are actively seeking to make our shared market infrastructure available as an industry enabler."

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development