MIFFED
At school I was a master of precis. I would take a large piece of work- The Encyclopaedia Britannica was a good place to start- re-jig it, condense it and present it. I was renowned for dull but accurate essays.
For me to do that with MIFID II would be nigh on impossible. This voluminous piece of regulation is beyond precis. If nothing else, my schoolboy slothfulness really can’t be bothered to read 1600 pages of technical and incomprehensible legalistic jargon.
MiFID II is a big thing and maybe we should be worried but recently I have been sleeping like a baby. I wake up every hour crying. My personal best for MiFID meetings in one day is five. It is going to be hard to beat but I am confident of doing so. MiFID II has been introduced to safeguard us against the chaos and destruction caused by the financial markets in 2008. The big and powerful banks wrought upon us a monetary mess and a consequential blackmail, the like of which had not been seen since the dog days of 1929. The mid-tier and smaller brokers were left to manfully save the markets, (along with unlimited central bank cash) as Bear Sterns and Lehman departed, destabilising the great names of finance alongside them. The angst ridden question, that is raised now, is whether MiFID II delivers the keys of the asylum back into the bloodied hands of the largest investment
banks.The high costs of implementation favour those with deep pockets. However, this is a rather jaundiced viewpoint. The ‘big boys’ too are suffering the vagaries of this massive regulatory invasion.
Hong Kong based consultancy firm Quinlan & Associates have estimated that ‘some research departments of big banks could face losses of up to $240 million post-MIFID II under their current structures’. This will lead to the now titled ‘Bonfire of the Analysts’.
The immediate impact of the regulation will be in Europe - a recent Greenwich Study predicts a cut of $100 million by European money managers in research budgets over the next 12 months - but Asia and the United States will be affected too.
The Markets in Financial Instruments Directive has been described as the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded. Nope, it doesn’t tell you much, you will have to read the other 1,599 pages to find out.
Let me precis it for you! Or easier take it off Thomson Reuters web page:
The high level goals of MiFID II are:
• Increased transparency of markets
• A shift in trading towards more structured marketplaces
• Lower cost market data • Improved best execution
• Orderly trading behaviour within markets
• More explicit costs of trading and investing
• These are correct and noble aims. There is no arguing that.
6 | ADMISI - The Ghost In The Machine | November/December 2017
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