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2007 - The Impact of MIFID

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The UK’s financial services institutions may be suffering compliance fatigue but ignoring what is arguably the biggest shake up in European banking for a generation would be an extremely high risk strategy. The penalties are not just punitive fines and negative publicity; in the worst case scenario, organisations could be forced to cease trading. To achieve the requirements for customer reclassification, demonstrating best execution, and provisions for regulatory reporting, organisations need to radically overhaul processes for recording and retaining every customer interaction. Processes have to be auditable and highly transparent. “It is clear that implementation of MiFID represents a substantial cost to industry particularly in earlier years, but it does create the potential for revenue opportunities over the longer term. We would encourage firms to focus on these opportunities,” said Hector Sants, FSA Managing Director Wholesale and Institutional Markets. Indeed, there are clear opportunities for business improvement, from easier access to European markets to leveraging improved customer relationships, driven by the FSA’s directive to Treat the Customer Fairly. The key message is that MiFID compliance is not an option.