New regulation comes into force

Europe's Markets in Financial Instruments Directive becomes law

Mifid will create a single market for financial services

The Markets in Financial Instruments (Mifid) directive to create a single market for financial services across Europe comes into force tomorrow (1 November).

The new regulation offers a real cost reduction opportunity for many large City institutions, said Gartner research director Peter Redshaw.

“Opportunities to reduce costs will arise through standardisation of services which will mean supplying services across many different countries more cheaply than before,” he said.

The Financial Services Authority has estimated that Mifid could save UK firms £200m per year (Computing, 4 October).

The directive also allows large institutions to establish their own share trading platforms or to have access to a more competitive market of stock exchanges.

But smaller firms could postpone some of their Mifid investment until 2008, said Redshaw.