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An article relating to this blog post on Finextra:

MiFID reforms published; compliance bill to hit EUR732m in year one and EUR586m per annum thereafter

Financial markets in Europe are set to undergo a fundamental overhaul, as the European Commission rolls out new rules and regulations covering every aspect of the trade lifecycle, from pre-and post-tr...


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Things to come

The MiFID review as expected is going to clobber the existing market causing massive changes in the execution and post execution of trades. Many people outside of trading will be very worried about the long term impacts on their business. While investors should be feeling a warm glow, as they will be finally be sure of getting a good deal.

Attacks on high frequency trading and the black hole trading that reverberate around investment banks, will be a source of encouragement for everyone in financial services that want to grab back the traditional values of client servicing and protection of their assets. Soon, it will be like waking from a bad nightmare, as Investment Banking begins to change forever. It will have to redouble its efforts to attract investors with hard and secure investing strategies, carried out in broad daylight, through execution venues that provide a provable best execution price.

Banks principal trading activities and bottom line focus will soon be ring-fenced from the need to provide the best possible deal for investors. Risks will be more visible and the penalties for failure severe and public. Reputational risk is no less going to be put on the line.

Investors will be encouraged back into the market, safe with the knowledge that irresponsible speculation by algorithmic trading will not create violent volatility, destroying investment strategies for the many, for the greedy needs of the few.

Stock Exchanges will be facing fierce competition in the future but on a level battlefield. This will generate further consolidations and a drive to find the differential, which is sure to be found in better pricing and better and more risk free services.

There is a huge cost to the industry for implementing such changes but over the course of time this will prove more than worth it, as the financial services industry recovers the almost forgotten values of investor protection and client asset servicing.

Risks in markets will always be a factor and without risks there would be no profit and no advantage to invest but the risks will be visible to all and managed far more than in the past.

I see good things coming but fear the traditional negative response from global banks as they drag their heels and push for amendment. However, it is hoped that politicians and administrators will be resilient and tough to make sure change happens and fast. If so the next few years will resemble a furrowed field just waiting to be planted with the harvest benefiting each and everyone one of us.

Investors getting a good deal and the landscape for the future of European investments will be debated at the November Post-Trade Forum ‘Stock Exchanges v MTFs’. Is the investor getting a good deal? Nicola Horlick and Brian Winterflood are at two ends of the industry spectrum and are joined in debate by Kevin Milne from the London Stock Exchange and Hiranda Misra former COO of Chi-X Europe.

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Gary Wright

Gary Wright

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BISS Research

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Post-Trade Forum

The Post Trade Forum's aim is to propagate debate and discussion between senior practitioners in Post Trade Operations in the global securities market; to bring about increased awareness and knowledge across both buy-side and sell-side financial institutions in financial products and be a focal point for firms and practitioners to air views.


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