The Market 2006-2007

There is no denying that since the Enron and WorldCom disaster which shook the global economy, the need for tighter controls around accounting and auditing for big firms was essential.

As a result SOX (Sarbannes Oxley) was introduced to counteract a potential repeat of the above.
Compliance for SOX and Basel II has, and continues to be an enormous financial drain on the FS industry. Many firms now believe that if they scaled their new systems down by as much as 75%, they would still be compliant for SOX.

This has created an air of caution throughout senior management across the industry particularly when they are now faced with MiFID (The Markets in Financial Instruments Directive) and CRD (The Capital Requirements Directive) for example.

However, MiFID level one is set in stone and unable to be altered and MiFID level two will be in the same state by the end of the autumn 06.

MiFID will replace and extend the ISD (Investment Services Directive) focusing on firms COB (conduct of business) and the internal workings of organisations.

MiFID is a major part of the European Union’s Financial Services Action Plan (FSAP), which is designed to create a single market for wholesale and retail transactions in financial instruments.

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Firms that fall within the scope of MiFID will also have to comply with CRD which will set requirements for the regulatory capital, which a firm must hold.

Although MiFID was created to enhance competition between different types of trading platforms and to provide for the first time for a “passport” across the EU for multilateral trading facilities, senior management across the industry are struggling to see the benefits that these directives were bought in to create.

One thing is for sure, that compliance and regulatory change is here to stay and the organisations that pro-actively embrace these changes will benefit.

Compliance, business, IT and operational departments across the FS industry are starting to buckle under the pressure. Due to the demands of BAU activities and other on-going project work the need to look for external resource to support Regulatory and Compliance led programs is inevitable.

MDM Consultants can provide a timely and cost effective solution.