The full impact of the MiFID transparency requirements for Equities are unlikely to materialise for some time, as the market responds to the changes that have been enforced. However, both the industry and regulators agree that a simple extension of the obligations, as applied to the equities industry, to additional asset classes would be inappropriate and further analysis is required before further legislation is introduced. The current period of consolidation following the 1 November 2007 deadline, presents an opportunity for firms to look at alternative methods for self-regulation to promote transparency and therefore confidence in the market before the regulators review the level of prescriptive guidelines required.

For more complex products and assets that fall into the area of Structured Financing, the issues around regulatory direction are magnified due to the unorthodox nature of the instruments involved. Whilst it is apparent that Retail investors, in particular, require a greater degree of transparency than is currently available, prescriptive ‘one size fits all’ regulation is not the answer and would likely stifle the innovation that differentiates the Structured Products market.

By introducing a system of self-regulation firms can pre-empt the inevitable legislation that will come from the EU and FSA and in doing so establish market best practice that will not only prepare them for the impending changes but also give them a competitive advantage that enables them to grab a greater share of the rapidly expanding market.

Download the MiFID Transparency and Structured Products White Paper