230 days to the first of November, 2007.

23o days to November 1st, and that includes weekends, bank holidays, summer holidays, etc. I wonder why nobody is in a hurry ?

P J Di Giammarino of the leading city technology think tank JWG IT (see their website at http://www.jwg-it.eu and download their roadmap to implementation document) compares the current situation to the early stages of a tsunami, when the sea 'withdraws' from the beach before the gigantic wave hits the shores with devastating effects.

The FSA has already sent out several strong messages that they will tolerate 'delays' but not lack of compliance. In other words, you need to have a MiFID implementation plan and provide supportive evidence that you are following it (rather than something that was put together at the last minute to prepare for a 'conversation' with the FSA).

In a couple of years, once the whole of the EU will be MiFID compliant the financial world will be different. MiFID changes go beyond a new trading report. Some of the most interesting changes will be :

1) Organisation, there are specific requirements as to where the head of Compliance has to be in an organisation chart; also, how many company have a 'risk mitigation' role?

2) Multiple trading venues. This will change the way you source market data and how you present them to the front office. MTFs (Multiple Trading Facilities) will increase in the near future, some larger institution may even create a role that monitors the market and looks into expanding the number of trading venues and how best execution policy will change to accomodate new trading venues.

3) Client classification. This could almost be done by an external agent, a lot of the criteria are attributes of the client rather than the relationship between client and financial company (e.g. information derived from the balance sheet). Whilst it is conceivable that a client may 'opt up' from retail status with some institutions and not with others, the starting point will be the same. If that is true for different institutions, it is even more true for different departments within the same institution. An interesting benefit of this will be a faster on boarding process of a client that already has some business relationship with the company. If any advisory service is provided to a client, the classification is also very important for 'suitability and accountability purposes' and will definitely influence best execution for that specific client.

4) Outsourced services. Some things in the relationship between provider of outsourced services and the client will have to change, it will not be enough to provide results. The client should be able to monitor how these services are performed. (It could be argued that if you outsource back office, your best execution policy will also affect the company that provides your back office service)

5) Expanded scope. Hedge fund, commodity brokers, investment research companies and others will have to comply with MiFID even if they may have been outside the scope of the Investment Service Directive. This will affect the way they operate and the way they structure their companies.

6) Regulators. At the moment, every company operating in London (for instance) is registered and regulated by the FSA. Once all the jurisdisctions are MiFID compliants and all the financial institutions will be passported, a trader moving from Deutsche Bank in London (which will have the German regulator as the 'home regulator') to Ing-Barings in London (a company that will be regulated by the Dutch regulator) will actually change regulator and may change some of the rules. This implies a continuous training programme for new hires and will create interesting consequences in the recruitment market.

And there is more. All these changes will take longer to implement than righting the code for the new trading report. Changing policies, organisations, and overall processes takes longer than changing code.

So... 230 days to November 1st. Are you still mesmerised by the sea 'withdrawing from the beach' or have you started running ?