Well, I was as surprised as most to read the Computer Weekly
article last week, and the idea that Gartner were dismissing MiFID as
no big deal. Therefore, I was not surprised when Gartner got in touch
to say that Peter Redshaw had been misquoted. In fact, Computer Weekly
have withdrawn the comments and the news from their journal and here’s
what Gartner have to say:
Weekly has indeed now removed the article from its online version
following our discussions with the editor. Essentially, Peter had an
interview with a Computer Weekly reporter, who subsequently used
Peter’s quotes out of context. Key is that comments Peter made when
referring to a specific type of company have been over-generalised to –
falsely – apply to all companies. In particular, when Peter said that
MiFID will only be a small update, he was talking specifically about
small FSIs on the buy-side that seek only minimum compliance.
include below the text of the CW article, complete with comments from
Peter (as PJR) that clarify his position and what he actually said to
MiFID will only be a small IT update for most UK firms, Gartner says
No – it has been a huge update for many, especially large financial
services institutions (FSI) on the sell-side that seek to take
advantage of MiFID opportunities. It will only be a small outlay for
those FSI that are small , on the buy-side, seeking minimum compliance.
Author: Karl Flinders
Posted: 14:00 21 Sep 2007
Markets in Financial Instruments Directive (MiFID) will only require
small IT updates for the majority of financial services companies in
the UK because many of the requirements are already the de-facto
standard, according to Gartner.
PJR> Repeats mistake
above. Also, only a few of the requirements are de-facto. My remark was
really a reference to the fact that there has been competition between
execution venues in the UK for some time. So MiFID requirements for
best execution, while vague, are less of a shock for FSI that are used
to doing business in the UK compared to FSI in other countries that had
the "concentration rule".
This is the message from Gartner
at its Financial Services Summit in London on 21 September when the
analyst company holds its MiFID: Have You Missed the Boat?
"In the UK, businesses are probably doing ok because the UK already has a lot of MiFID requirements as de-facto,"
PJR> See above – this misrepresents what I said and is overly simplistic
Peter Redshaw, research director at Gartner. He said meeting the
directive will be far less challenging than it was for businesses to
meet the Sarbanes Oxley legislation introduced in the US in 2002,
concerning accounting and reporting practices.
No. It is possible that MiFID will be easier for some small, buy-side
firms but it has been a lot more complex and challenging for big,
sell-side firms that are setting up exchanges or as systematic
internalisers. Also, the principles-based nature of MiFID often makes
it very hard to interpret (goal is clear but how to get there is not)
of MiFID that Redshaw said the UK is already prepared for include best
execution when a customer must be given the best deal available.
"Companies are already used to searching for the best price," said
PJR> Only in limited cases – they may be
comfortable with mainstream equities but it is going to be extremely
difficult with some other products, especially derivatives
said the main challenge is for companies to be able to report the
history of a trade years after it was completed to prove that the
customer got the best deal available at the time. "You have to record
the trade lifecycle," he said. This is all about having the right
archiving and searching technology in place, he added.
Again, this comment is largely aimed at small, buy-side FSI that are
late with their preparations. I expect they can achieve minimum
compliance at first but may then struggle later to be able to prove
continuing compliance over a historical period. It is about being able
to show evidence that they followed policies agreed with customers and
can reconstitute (not merely record) trade lifecycles from many years
He warned companies to work on meeting the rules introduced by MiFID but said for many it will not be too challenging.
[financial services companies] have done nothing, it will be tight but
there are a large number of companies that do not have to do great
deal," he said. "For some people that are on the buy side there are
some major changes. But for the majority it is a small update to what
they have in place and some can be outsourced."
Completely reverses my position – it is the sell-side where there are
major changes. Many on buy-side will also want to do more than just
minimum compliance. But my point was that if you are a small, buy-side
FSI, it may not be too late to avoid disaster. You might just have time
to pull back from the brink of disaster.
businesses must decide what they can delay, what they can delegate, and
what they must do now to help them reach compliance.