Majority of firms unprepared for Mifid implementation, survey finds

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Yet another study from a software vendor has indicated that only a small proportion of financial service firms are on track with their preparations for the implementation of Mifid, which comes into force on November 1.

The latest research, conducted by SunGard and TradeTech, found that only 13% of firms surveyed are on track to meet the Mifid requirements by the deadline, while 60% of respondents indicated that their preparations still needed some work.

The results, taken from the third in a quarterly series of polls undertaken by SunGard and TradeTech, reinforce those of an earlier poll, in which over 65% of respondents admitted they were yet to even identify or plan operational budgets to meet the demands of the directive.

Even though only three countries have transposed Mifid into national law, 63% of those surveyed did not believe that this would delay the implementation programmes for firms located in countries that were on track.

However, respondents were concerned that firms located in the countries lagging behind with the transposition of Mifid would be placed at a competitive disadvantage. Some 46% of those surveyed also stated that they remained concerned that their own national regulators would add further complexity to Mifid through the imposition of national laws and additional guidance. Commissioner McCreevy has however begun infringement proceedings against the countries that have not yet transposed, and has urged firms to push their governments to bring Mifid transposition to the front of the regulatory agenda.

Best Execution for equities remains one of the biggest challenges for firms – only 23% of firms believe they will know how to ensure Best Execution by the end of April, with most (62%) estimating an August/September timeline. More than 70% of firms expect to use “post-trade statistical analysis” to ensure best execution, with over 45% expecting to do pre-trade analysis and more than 40% expecting to use manual reviews.

“Many buy-side firms are now expecting to opt down to professional status, with the impact that many will become Systematic Internalisers. Of those surveyed, 25% of buy-side firms now believe they will become Systematic Internalisers within the next five years – a significant increase from six months ago,” said Richard Thornton, head of Mifid consulting at SunGard Consulting Services.