Over someone’s shoulder on the train this morning I noticed an article about remarriage being “the triumph of hope over experience”. It makes me think of one political party’s theme-song of “Things can only get better”, but also what got us out of living
in caves in the first place. And I can just see one Eeyorish caveman saying to another, “Don’t bother – you’ll only burn your fingers again”.
One view of markets is that they should be regulated and domestic, because lots of things can go wrong in a big world, so you write rules for everything that anyone could ever dream of doing, saying what you can do, what you can’t do, and the way you have
to do it if you do it at all. Rules to ensure general Narrow-Minded Safety. Or RegNMS for short.
Another view of markets is that they are about the principles of the free play of competitive forces in an open and level international playing field. Which is more what MiFID is about.
Much of the market experience that we all have is based on our awareness of how markets work in the USA. That awareness doesn’t necessarily mean understanding – we often do things this way unthinkingly because “that’s the way that we do things”. We do
the same things again and again because that’s the way that things are done. We keep burning our fingers.
At some point back in his cave, that caveman changed the way that he did things and found a way to make fire without burning his fingers.
MiFID brings change to the way that we do things. It’s already setting a new base-line example for national markets and regulators around the world about how markets can work better. It could be a triumph of hope over experience.