Governments Fail Business One More Time

To people outside the financial industry, a MiFID might sound like a kind of bionic aphid, but in fact the EU's Markets in Financial Instruments Directive (no, no, don't click away just yet) is going to bring about the biggest shake-up in Europe's investment sector since the abolition of exchange controls.

Once MiFID comes into action in November, any seller of investments in the EU and the EEA (including stocks, bonds, futures, derivatives, or anything else tradeable) will be able to use a MiFID 'passport' to sell anywhere in the whole area under 'home' country legislation (home = where the seller is registered), but subject to strict transparency and 'best execution' rules.

The legislation was supposed to be in place as of 1st January this year in all EU countries. Now, without cheating (don't look ahead!) guess which are the only two EU states which have actually implemented MiFID.

OK, you got the UK. Bet you didn't get Romania, though. All the other 28 EU and EEA states have failed, so far. Most of them have hardly even tried. What would you think of that if you were an investment seller in France, Italy or Sweden, for instance? On 1st November, every stock-broker in London and Bucharest (OK, just trying to be fair) can sell ETFs to your clients; but you can't sell anything to their clients, because your government and financial regulator are too lazy or too thick to have realized what they had to do.

Mind you, you can sue your government in the European Court of Justice for all your lost profits. That should be fun!