30 October, 2007. MiFID will happen in less than 48 hours from the time I am writing this. How nice of the Financial Times to dedicate one page to MiFID and a full section of the Lex Column to a "Mifidiot's guide".
The conclusion in this guide is that MiFID is a "one-off, back-office event". Well, this is interesting to learn for those who have spent time, efforts and money in other areas of any investment firm. JWG-IT (www.jwg-it.eu) has a very interesting diagram showing all the areas affected by MiFID and it is goes way beyond the back office. I wish I could share the optimism of MiFID being a one-off, it will not be possible to see the effects of some of the major changes brought in by MiFID until way into 2009, therefore we shall see a MiFID II and maybe a MiFID III when it will be possible to assess some of the changes introduced post 1 November (also, there are two major reviews planned for 2008 - commodities and fixed income transparency - so there goes any hope for a ‘one-off' change).
The same guide shows a major lack of understanding of the core impact MiFID will have on the financial industry. Splitting listing from trading mean that you do not have to list in the same jurisdiction that also ‘hosts' the major market for your shares. As I wrote a few months ago "Shares listed in Finland could be traded in Portugal, a company listed in Cyprus could be traded in Iceland and everything of any liquidity will be traded in London." (see my blog "Vision of a post MiFID Europe" ). Some regional stock exchange may emerge as a major "listing hub" for Europe and market concentration may follow different pattern of investment in different parts of Europe.
Major consequences for Front Office people have been overlooked, one of the challenges will be coping with what to say to clients that may occasionally make execution only orders and occasionally seek investment advice and with clients that are classified as ‘retail' for one financial instrument and ‘professional' for another.
Is there a market out there for an idiot's guide to MiFID ? Maybe, but it has to be an accurate one.