Let The Battle Begin!

Implications: The Jury Is Out - But At Least We May Get a Verdict of Sorts Next Year. Historically Major Regulatory Changes Result in Unforeseen Consequences.

Analysis: The jaw jaw bit of the pre-MiFiD era is thankfully over and the many consultants who crawled out from under the rocks they occupied after their humiliation at predicting the Y2K bug that wasn't will hopefully go find another "crisis issue" to deal with in another sector. Now the exciting phase of analysis begins and it will be an intriguing battle.

The plain truth is we can't tell right now where MiFiD will take us but we can make a few educated guesses while awaiting some actual data - but don't expect anything very meaningful until Q2 2008.

Traditionally major regulatory changes result in some unforeseen consequences arising. The smart money ought to search for "the bumps in the carpet" as that is likely to be where the biggest opportunities lie in the long term.

That said, MiFiD is an interesting law and David Wright at the EU has made a passionate pitch to engender cross-border competition and the best price for the client.

Initially, the focus is on the left field platforms making inroads against the  legacy exchange players and this seems plausible. Certainly competition will be intense and nerves will be somewhat frayed at a great many exchanges - which is frankly no bad thing.

So, for now, the key is to let battle commence but not to draw too many conclusions in the short term. Ultimately there will be big impacts from MiFiD but the current conclusions of the market players may well be a tad simplistic. This is three dimensional legislation and as such will have a greater ramification than simply concentrating more business in London. In fact, if anything MiFiD may favour fragmentation for at least a few years.

Patrick L Young
The Danube Project