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There's no hiding from Mifid

Mifid promises to shake up EU financial markets in a way that will make Big Bang look like a gentle nudge. To have any hope of meeting the implementation deadline of April 2007 investment banks might need to set aside as much as $12 million each in their 2006 budgets. Peter Koh examines the fallout

MOST OF THOSE who have heard of Mifid, the EU's Markets in Financial Instruments Directive, fall into one of three groups, two of which harbour conspiracy theorists. The latter camps are located on either side of the English Channel. The group on the French shore believes Mifid is a British conspiracy to destroy Europe. The other, massed behind the white cliffs of Dover, fears it is a continental European conspiracy to destroy the City of London.

The third, and by far the largest, group is of the ostrich persuasion – with their heads are buried in the sand. People in this group either can't believe anything like Mifid could actually happen or think it is just another banana Directive – an obscure and remote piece of irrelevant regulation.

Like the banana Directive, EEC 2257/94, which regulates the quality, size and curvature of bananas marketed in the EU, Mifid is by no means the stuff of myth and legend. Mifid deals with all transferable securities (including equities and bonds), money-market instruments, collective investment undertakings and derivatives (including options, futures, swaps, forward rate agreements and credit derivatives) on a broad variety of underlying instruments (including securities, currencies, rates, commodities, climate, freight, emissions and inflation).

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