Brexit, What next for MiFID?

The Markets in Financial Instruments Directive (MIFID) was an EU regulation initiative that aimed for harmonisation of financial services regulation in Europe’s 31 member states.

The intention was to see increased competition and more consumer protection.

MiFID 1 in EU directive 2004/39/EC was the first step and in April 2014 MiFID 2 was approved that tidied up the original MIFID thinking and by January 2018 MiFID 2 and MiFIR (Markets in Financial Investments Regulation) will take effect.

MiFIR/MiFID II had the potential to boost transparency and increase investor protection and readying the member states for implementation was likely to be a very painful process and no allowance for any transitional stage will make the deadline even harder to meet.

And what about the massive MiFID costs already incurred and about to be incurred by the UK? So far:

  • One-off compliance costs for the UK were estimated to be up to £188 million
  • Ongoing costs from 2017 are estimated to be  between £79.8-£150.4 million
  • The UK will/ would have bear 36% of the estimated total cost of Mifid II
  • Total transition cost estimate is £194.8 million
  • Average annual cost, excluding transition: £112.5 million

*Source: HM Treasury Impact Assessment

Now we have voted to leave the EU, where does the UK go on implementation, almost two years on from when article 50 to leave will have been implemented?

Where does the EU go as the UK market is amongst the biggest of global financial players?

Time for some guidance from the FCA and HM Treasury I think?

Especially as the Stock Exchange is about to be acquired by the ‘Germans’…..or will it now?

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It’s much more complicated than that

It’s much more complicated than that

Despite last minute attempts by Germany to woo a UK ‘stay vote’ with some very tempting offers such as:

1.    We’ll acknowledge the Wembley goal

2.    We’ll stop making jokes about Prince Charles’s ears

3.    We’ll stop using sun cream on the beach out of solidarity with your sunburn

4.    We’ll reserve a place with our towels for you on the hotel sun-lounger

5.    We’ll introduce tea breaks

6.    We’ll turn our clocks back an hour to be in synch with you

7.    We’ll do without a goalie in penalty shoot-outs with you to make it a bit more exciting

8.    We’ll introduce an EU regulation banning a frothy head on beer

9.    We’ll all come along to the Queen’s 100th birthday

10. We’ll willingly provide the villain in every Bond film 

we have voted to leave.

Al Murray explains how economics worked very well in 2015. As he says. it is much more complicated than that.

However you voted yesterday this might bring some cheer to your day if you are still feeling a little down.

On a more serious note, the markets are looking at doing their job of making money with fresh vigour as Brexit presents an opportunity as well as a threat. The day started with the pound taking a hit against the dollar but more interestingly the euro has collapsed against the dollar, suffering its worst fall ever in the wake of the UK’s vote to leave the EU.

By lunchtime today , as I write, the markets have recovered half their losses already showng a loss of 4.23% on the day.

Winston Churchill said A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”.

A ‘Brexit’ negotiated via “article 50” will take at least two years. David Cameron was right to announce his resignation, as he would have been in an impossible position in negotiations for leaving. Do not forget there are general elections in Germany and France in 2017 and those we would start to negotiate with, in particular Merkel and Holland, may no longer be in office by then.

And, very importantly, the US Presidential elections in November.

There will be some turbulence and there will be money to be made. Markets will bounce back. The vision must be positive and this Bento is an overview of informed comments about the impact of leave.