Europe Trails UK in MiFID Preparation

LONDON-The disparities between Markets in Financial Instruments Directive (MiFID)-related activities in the UK and continental Europe have been growing ever since a consortium of Tier I banks announced the creation of two MiFID projects dubbed Project Boat and Project Turquoise, industry watchers tell IRD.

In September, nine global securities firms, under the Project Boat name, announced plans to create a market data dissemination platform to address MiFID's pre- and post-trade transparency requirements.

ABN Amro, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS signed a letter of intent and term sheet to gather trade transparency information across Europe.

Under the codename Project Turquoise, the same group of banks, but without ABN Amro or HSBC, also announced in November that they were creating a pan-European equities trading platform in the form of a new multilateral trading facility.

These projects don't include any large banks from France, Italy, Spain or any other Mediterranean and eastern European countries.

"We see the UK leading in [the MiFID] space," says Nigel Matthews, capital markets director for Oracle's EMEA operations. "The Germans are catching up fast, and the Nordic countries are showing an interest in [MiFID]," he adds.

However, PJ Di Giammarino, founder and chief executive of JWG-IT Group, a MiFID think tank, does not rule out a change in dynamics. "There won't be one version of [Project] Boat," he says. "There may be a Club Med version of Boat or an eastern European version of Boat."

Although these projects seem to exclude particular countries, they are still beneficial for the market. "The industry is getting together," says Matthews. "They focus on the areas where they can leverage competitive advantage. Twelve months ago, nobody really believed there was an opportunity for banks to gain that advantage," he adds.

Firms also need to make time for testing, says Di Giammarino. "Your test plans need to be in place by March 2007 if you want to be ready," he says. "For every £1 you do not spend on testing, it will cost you £6 to fix it."

However, "member states will need a kick in the behind to take action and implement [MiFID]," says Kenneth Mullen, a partner in the media and technology team at Edinburgh-based law firm Shepherd and Wedderburn.

Olivier Laurent