Forefront Communications

Bloomberg: With Two Months to Go, U.S. Faces ‘Mad Dash’ to Adjust to MiFID

Confluence

Mark Dowd

Mark Dowd

For thousands of brokers, traders and money managers based in the U.S., time is running out. Enterprise services like Visible Alpha see a lack of preparation for MiFID II.

A shock wave is about to emanate from Brussels, the capital of the 28-nation European Union. That may as well be the dark side of the moon for some toiling away at financial firms in the U.S. A sweeping set of financial regulations dubbed MiFID II will take hold on Jan. 3, affecting everything from investment research to the booking of transactions. Most have heard of it, but they haven’t all fully addressed what will likely become a seismic industry shift.

“There will be a bit of a mad dash,” says Mike Stepanovich, who has spent months helping firms fine-tune their technology to value the research they consume and be MiFID compliant. Stepanovich, president of enterprise services at Visible Alpha, said it’s an arduous process and many firms won’t be ready.

While the Markets in Financial Instruments Directive won’t be rule of law in the U.S., it is almost certain to transform the way the trading business runs in both regions, industry participants say. While U.S. regulators have taken steps to mitigate some of the impact, MiFID’s reach will still be felt because it’s easier to meet the highest global regulatory standards than to juggle differing regional benchmarks. Key pillars of the rule include stopping banks from using free research as a lure for trading commissions, and requiring financial firms to prove they’re getting the best deal for customers.

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