Non-compliant firms will suffer post-Mifid

Firms in countries where the national legislature has not yet transposed Mifid into law face severe competitive disadvantages, says CEPS

BRUSSELS – The Market in Financial Instruments Directive (Mifid) comes into force today, but many EU member states have not yet transposed Mifid into national law and risk placing their financial services firms at a considerable disadvantage.

Karel Lannoo, chief executive officer at the Centre for European Policy Studies (CEPS), warns, "member states are short-sighted not to transpose". He argues banks and brokers in member states where implementation is lagging behind will suffer a "huge delay" and be at a "competitive disadvantage" to those in states where the new rules are in place.

Internal market commissioner Charlie McCreevy has again attempted to push states along in implementing the new directive. "Mifid is a groundbreaking piece of legislation. It will transform the landscape for the trading of securities and introduce much-needed competition and efficiency… I urge those member states that have not transposed to hurry up – such lack of action will damage their own firms," he says.

Spain, Hungary, the Czech Republic, Poland and the Netherlands are all late in transposing Mifid. Italy managed to transpose at the last minute, as many expected.

Lannoo also warns financial services firms that the implementation of Mifid exposes them to litigation from clients in the area of best execution. Firms in member states where transposition is late are most a risk. “There could be court cases against banks that have not implemented best execution,” he said.