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Anyone for MiFID III?

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By Steve Grob, Director of Group Strategy, Fidessa

I was chatting with the Reg folks here at Fidessa Towers yesterday and the spectre of MiFID III came up. Before you all jump off the window ledge, there is no official notion of this yet, but when will the regulators feel that their work really is done?

The direction of travel has been clear for a while – dismantle the current industry and replace it with something that is utilitarian, uniform and, above all, safe. At the heart of this is the regulator’s poster child ‘outcomes for end investors’ and making sure that their investment dollars are spent properly.

It seems, therefore, that the regulatory cross hairs are going to focus even more on the buy-side than the sell-side moving forwards. Once research has been unbundled and paid for explicitly, won’t that just raise the issue of brokers providing trading screens, FIX connectivity and other services to their buy-side clients that are not directly paid for? To make matters worse, the buy-side is fighting a fierce rear-guard action against passive investment, which means it is hardly in a position to pass any extra costs on to end investors. The net result will be less choice, as buy-side firms exit the business.

The real issue is trust – either I trust my supplier (Amazon, BMW, Ocado) and will keep using them, or I don’t and I won’t (VW, Samsung). Commercial reality is far better at making this happen than the increasingly forensic and globally inconsistent approach of regulators.

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