The International Monetary Fund has just issued their analysis of what’s going on in European financial markets (64 page pdf), with a particular focus on MiFID.
Here’s a summary of the key headline impacts of MiFID in their view:
new environment created by MiFID could trigger drastic changes in the
architecture of capital markets and the organization of financial
intermediation in Europe;
- MiFID could result in increased polarization of the financial services industry in Europe;
developments remain difficult to predict, stock markets appear unevenly
positioned to withstand the challenge of increased competition; and
- there is a risk that more competition and transparency lead to a fragmentation of market liquidity.
are also several interesting charts in the report, with table I.2 of
particular interest. This show the percentage of sources of revenue
for various European Exchanges in 2006. Here’s a summary:
LSE Euronext Deutsche Boerse
Listing 18.1 5 16.9
Trading 46.9 28.2
Derivatives 2.7 35.5 32.2
Post-Market activities* 1.3 37.8
Data Services 30.3 10.2 8
IT 16.7 5.1
Others 2.1 3
* Clearing, Settlement, Custody
… with Data Services being particularly impacted by MiFID with the
transparency of trade reporting and the launch of Project Boat and
other services, no wonder the LSE is worried. Mind you, just look at
the Deutsche Boerse’s clearing ops … no wonder there’s no standards
in place for a pan-European Clearing & Settlement mechanism in the
In the conclusions of the IMF report, they
state that "the first and most pressing challenge is for national
authorities to meet the implementation deadline."
So it’s also interesting to note that, in the latest release from the European Commission’s survey of countries
and their MiFID implementation plans, Spain and Greece are both now
saying they’ll miss the November 2007 date. But also interesting to
note that many other countries – Estonia, Poland, Lativa, Cyprus,
Lithuania and Slovakia – are showing significant slippage in their
dates for transposition.
Nevertheless, it’s good to see that
the Danish forecast of October has been brought forward and they have
achieved implemented already … must be the long summer nights leaving
them with nothing better to do.