At a recent Euromoney FX conference, one buy-side participant told me how he had to have competitive quotes, backed up by full details of the deal from pre- to post-trade to satisfy his auditors every time he did a spot transaction. In contrast, whenever he did an option, he didn’t have to bother with any of that. I pointed out that, as far as I understood it, his policy ran contrary to what would happen in the post-Mifid environment.
For those who are unaware, the EU’s Markets in Financial Instruments Directive is intended to bring transparency and ensure best execution to the EU’s securities markets. It will supposedly be implemented from November. It seems some FX participants are completely unaware that it will also impact them.
Mifid is not going to just cover equities. Many sharper players are already aware that it also at least partially includes FX. Recently, FXall published a booklet in conjunction with Euromoney called Best practice in foreign exchange markets, which provided an update on the potential impact Mifid will have – it provides a nice snapshot of the current situation.
This week I managed to extract some clarity from the FSA on which FX products will be covered by the Directive.