Loss-making Nyfix is likely to incur further costs in the development of its Euro Millennium dark pool after it was deemed non-compliant with the latest interpretations of the MiFID rulebook by the UK's Financial Services Authority.
The ruling by the FSA is a blow to Nyfix, which has just recorded its first slice of revenue over the system since its launch last year.
The FSA has called for modifications to Euro Millennium and Liquidnet's European dark pool to meet demands by the Committee of European Securities Regulators for more transparency in pre-trade prices over the platforms.
In a statement accompanying its financial results, Nyfix says: "The FSA has proposed an interpretation of a particular provision of MiFID that would require modifications to Euro Millennium's current functionality. Such modifications would result in additional development costs to the company and would need to be completed within a timeframe acceptable to the FSA. The company is engaged in ongoing conversations with the FSA regarding this interpretation and hopes to find a resolution that will minimise any impact on Euro Millennium's service."
Nyfix has so far incurred more than $10 million in costs re-engineering its Millennium block trading service for European investors. In its year-end results statement the firm says the platform achieved a new record of over EUR200 million in value matched on one day last month. However, depite generating its first revenue stream of $0.3 million, Euro Millennium turned in a net loss of $2.2 million for the fourth quarter.
Across the group, Nyfix reported a net loss of $16.4 million for the year, down from a net loss for full-year 2007 of $41.1 million.