CBA of Mifid finds compliance costs will be ‘substantial’

A study on the costs and effects of the Markets in Financial Instruments Directive has found that costs of complying with the Directive will be substantial. ‘Mifid Implementation: Cost Survey of the UK Investment’ found that the one-off sum total of costs for 33 firms was £69 million, while ongoing costs totalled £6.9 million.

The study found that the heaviest costs from Mifid were (from greatest to least) two-way papering, best execution, classifying the client base, data gathering for suitability, benchmarking, loss notification and appropriateness. Firms found that costs could not be passed to consumers and therefore would have to be absorbed. Profits in general were predicted to decrease.

The study showed that firms agree that consumers will benefit from benchmarking and loss-notification, but not other provisions of the Directive. Only 9% of firms in the sample will use passporting as a result of the Directive, which has been used as the main selling point to firms.

The FSA will use the study in its upcoming CBA on Mifid. Click here to read the study in full.

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Investment banks: the future of risk control

This survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control

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