Lovells

Research announced today shows that more than 90% of the top asset management companies in the country have not begun to implement the changes required to comply with the Markets in Financial Instruments Directive (MiFID). The regulation - designed to improve the operation of the single European market - comes into force in November 2007, just 12 months away.  

The research commissioned by Microsoft, in partnership with law firm Lovells, and performed by market research company Clearconcepts, also revealed that a third of companies surveyed had no specific budget assigned for MiFID compliance. Overall, the firms most at risk of missing the deadline are those with overseas activities.  

Firms were also asked to consider the effect that the directive would have on their operations. 60% of firms felt that the directive would have a negative impact on their business and 36% may consider restructuring their business to avoid the impact of MiFID in the UK.  

Those firms that believed MiFID would have a positive impact on their organisations thought the principal benefits would be to reinforce existing projects and to put new policies in place. Only 6% felt that MiFID would have a harmonising effect in Europe.   

Progress by the industry on MiFID projects has been difficult however, as firms have been waiting for more detailed information to be released by the FSA. The research revealed that reviewing FSA consultation papers (such as the recently released NEWCOB paper) would be a top priority over the next three to six months; this was closely followed by continued gap analysis.  

By far the most problematic area of the directive for firms surveyed was best execution followed by client categorisation and trade and transaction reporting.  Some areas that are expected to have significant impact, such as outsourcing, client money and client documentation, were not seen by those surveyed as being as great a concern.   

Jim Burns, CTO for Financial Services, Microsoft UK, works with leading financial services institutions and commented on how MiFID has affected firms. “Those of our customers who are making good progress with MiFID are taking an holistic approach to compliance. By helping these companies identify common themes across the regulatory landscape, such as reporting and "know your customer", we can create workflows which will ease the burden of compliance for a prolonged period, not add layers of process which need to be updated with each incoming regulation.” 

Rachel Kent, Head of Financial Services Practice at the international law firm, Lovells said: "As the survey shows, most firms have been waiting for clarity before committing time and resources to the MiFID project. But in most areas things are now as clear as they are likely to get, and both the EU Commission and the FSA seem committed to meeting the November 2007 deadline. 'Wait and see' is no longer a realistic option."

About the survey

The survey group included 50 of the UK's leading Asset Management firms ranked by total funds under management. Firms with and without overseas activity were included. A wide range of respondents took part in the survey: heads of compliance, MiFID project managers and managers from risk and legal.   

For the full report please click here 

About MiFID 

For more information on MiFID please click here for the Lovells guide 

James Burns CTO Financial Services, Microsoft UK  
As CTO, James’ role is to spend time with Microsoft customers in the UK financial services to understand their problems and how they can address these problems in an agile way. 

James joined Microsoft in 1997 and has been a member of UK Financial Services team since 1999.  

Rachel Kent - Partner
Head of Financial Services Regulatory Practice, Lovells  
Rachel is a Partner in the Financial Institutions Group at Lovells and head of the firm's Financial Services Regulatory Practice. She advises across the range of regulatory issues in the financial services sector, and on firms' relationships with the FSA. She also advises on commercial transactions in the sector, with particular focus on outsourcing and on structuring new businesses, commercial products and services  

About Lovells  

With over three thousand people operating from 26 offices in Asia, Europe and the United States, Lovells is one of a small number of truly international law firms. The firm advises many of the world's largest corporations, financial institutions and governmental organisations. The firm's highly-rated Financial Institutions Group specialises in technical advice to the financial services sector both in the UK and in the other major EU markets.

www.lovells.com  

About Microsoft  

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realise their full potential. 

www.microsoft.com        

About Clearconcepts   

Clearconcepts is a leading provider of tailor-made marketing solutions for Financial Services and IT. Our services include market research, events, PR and campaign management.