MiFID: Back to square one

Recent surveys appear to show that the buy side and investors are getting a real raw deal with MiFID. Wealth managers are feeling the pinch with so many new trading venues to connect to even to have a chance of achieving best execution. The cost of connecting to so many venues is high and being passed back to the client in within the charges. As Stock Exchanges reduce their charges for sell side firms they are retaining these costs savings as some sort of buffer against their losses in the financial crisis.

A cry for help comes from the buy side in trying to make sense of all the new trading venues and actually what are the differences between each? On the face of it all are offering similar systems and services. We now see that some of the first MTFs are up for sale and the Stock Exchanges possibly likely buyers. That's after the Lord Mayor's show if I have ever seen it, as if this trend continues to its ultimate conclusion we will be back to square one with the few major Stock Exchanges dominating the market.

If this is the first step back to square one what has been achieved? A few have made plenty of money by setting up the MTFs and so on. The software suppliers have made a killing with new functionality sold, if still yet to be paid for. Some consultants have made hay and a few individuals have milked publicity and enhanced their name. The lawyers! Well, they always win!

The cost side looks wide and rather sad. The Stock Exchanges have lost revenue and if they buy the MTFs some capital. However, they return to their dominant position. The Buy side has lost in MiFID projects and the cost of change and possibly revenue. The investor always picks up the tab when politics and business screw up.

The EU commission will sadly remain blameless as their backs will doubtless already be covered; no finger pointing here and no blame culture.

So back to square one, don't pass go and don't collect your reward as MiFID is still here.