West Indies Management       

MIFID Frequently Asked Questions (FAQs)

1. What is MiFID?
2. What does MiFID mean to IT?
3. What should I do first?
4. How can West Indies Management assist?

What is MIFID?

MiFID is an acronym for Markets in Financial Instruments Directive.

The European Union has passed legislation to replace the Investment Services Directive (ISD) with MiFID.  The deadline for EU countries to pass supportive legislation is in 2006, with the deadline for corporate compliance delayed to 1 November 2007.  MiFID is a cornerstone of Europe's Financial Services Action Plan (FSAP).

MIFID expands the number/types of companies impacted to include any company that deals with Financial Instruments (or investment products containing securities), including:

• investment banks;
• portfolio managers;
• stockbrokers and broker dealers;
• corporate finance firms;
• many futures and options firms; and
• some commodities firms.

Additionally, Retail Banks and building societies will be subject to MiFID for some parts of their business.

Simultaneously, many of these companies will, for the first time, be subject to the new Capital Requirements Directive (CRD), further impacting their cash flow.

The Financial Services Authority in the UK (FSA) has published a planning guide for senior management called "Planning for MiFID"

Back to Top

What does MiFID mean to IT?

MiFID has far more stringent requirements on firms to provide proof of "best execution" and also has major communications requirements...which records will need to be stored for five years.

Lots of firms currently trade off-books and do not currently have the systems, processes nor organizational structure to record, store and retrieve/report on these transactions to prove that they've provided "best execution."

Between the new communication and compliance infrastructure required, analysts predict that companies will spend Euro 14-15 million on IT and Euro 16-17 million on process reengineering, with a total cost to industry of around Euro 1.45 billion.

Back to Top

What should I do first?

There has been a lot of focus on implementation rather than the business decisions needed before implementation can begin.  Here are some good questions to answer before proceeding:

1. Does MiFID apply to us?
2. If yes, which departments/organizations need to react to MiFID?
3. Where are my MiFID risks and opportunities?
4. Will my current compliance levels/capabilities allow me to exploit new MiFID markets and/or to protect my current markets?
5. What are the risk/reward implications of MiFID vis-à-vis business, organizational, compliance, processes, tools and technologies?

Back to Top

How can West Indies Management assist?

West Indies Management can provide impact analysis and implementation delivery for MiFID projects. 

Back to Top

Back to Top

Copyright © 2003-2006 - West Indies Management s.r.o.