As Storm Eleanor literally howled across the UK last night I woke up wondering if it was some portent to today – Jan 3rd – MiFID II go-live day. But here I am, sat at my desk, and everything seems pretty normal. No one seems to expect huge volumes today though, as traders gently blip the throttles of their new MiFID compliant trading machines. But, now the day has come, two things strike me – first is the enormity of the industry effort involved in getting ready and, second, the almost complete insignificance of it all. The first is easy to understand – 10 years and 1.7 million paragraphs of new rules (thanks Phil at the FT for counting them all up for us). These then had to be read, interpreted, reinterpreted, coded, tested and implemented. Fidessa alone spent more than 10 thousand man days on this just in 2017, so who knows what the total industry bill is.
But does the man in the street feel that today he has been somehow liberated from the clutches of Capital Markets? Frankly I doubt it. Will he be raising aloft the holy grail of best execution as a chalice hard fought for? Nope. And, best of all, are markets actually any safer? Well they are certainly more complicated. One venue, for example, which boasts a plucky but relatively modest 1% market share, has no less than 9 different sub-venues and MIC codes. And, in my experience, greater complexity generally equates to greater risk so we can’t tick that box either.
Given the choice I suspect the outside world would have preferred this money and effort expended on something else. So maybe it should be called for what is – a punishment tax that simply drives up the participation cost for the public at large.