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The imposition of a more stringent global regulatory regime for all financial markets is the talk of the town at the moment. So it is somewhat surprising to discover that the implementation of the Markets in Financial Instruments Directive (Mifid) in the EU in November 2007 resulted in a huge decrease in the number of FX brokers registered with the FSA.
Neither the FSA nor the broking firms I spoke to will say how many brokers have let their registrations lapse. Clearly there is a cost involved in registering, and while I’m not suggesting the firms are acting in any way improperly, I doubt Mifid was ever intended to give brokers a chance to save a few bob on their annual registrations. It was meant to tighten up propriety in all financial markets. But a loophole has been presented and the brokers have seen a chance to squeeze through it.
Chris Taylor, the London compliance manager of Tullett Prebon, explains the rationale of the mass deregistration.