Tuesday 12 June 2007

MiFID, Y2K and regulators

An anonymous reader of this blog posted a comment to 'MiFID time to stop talking and start acting', where they make an interesting parallel between MiFID and Y2K, they write: "Deadlines that a large number of people/orgs don't take seriously have a tendancy to slip back several months or years until they do." . I disagree.

One of the big question mark in the MiFID saga is the future attitude of regulators. What will they enforce ? Who will they target for enforcement ?

Some regulators run the risk of being the target of enforcement procedures themselves; but will they use enforcement as a way of creating 'hidden gold plates' ? After all if you are determined to preserve concentration, one way out of it is to quietly allow operators in your territory to have just one trading venue. (As somebody else wrote in another blog: Financial TechInsider).

As far as concentration is concerned I am a firm believer that ultimately the market will take care of it but on other part of MiFID the question is perfectly valid. Will regulators follow the example of the FSA (who has recently adopted a much stricter attitude towards November 1st as a deadline) when they themselves are spectaculary late ?

Who will they pick first when they decide to get tough on non compliance ? what will they decide to be tough about ?

Ultimately, I think that the biggest threat looming over non compliance is not a regulator, it is a client loosing money and taking an institution to court for breach of best execution.

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