For Mark Twain it was death and taxes. For the investment industry it is change. But when it comes to MiFID the only thing the market can be sure of is that the impact will be big. The challenge is not change itself, of course. Only 10 years ago bawling brokers in brightly coloured jackets were the norm in markets across the world. But once the “battle of the bund” was won by Eurex, it did not take long for almost everyone to move to remote electronic trading platforms, increasingly leaving the commodities markets such as the London Metal Exchange alone in the open outcry wilderness. Even these have now begun the migration to the new world of electronic markets.
A venerable trading culture may have been disrupted, but the drivers were clear – quicker, more flexible trading coupled with lower transaction costs via electronic markets meant the old landscape became costly and obsolete. The increased technology spend was often onerous and although it seemed a sound investment, not all businesses managed the transition effectively. Many exited and others chose to outsource.
