MiFID is a major EC directive which came into effect in Europe on November 1, 2007. MiFID is aimed predominantly at Europe's capital markets and has multiple sub-directives to it which all relate to the common theme of trade lifecycle transparency. Unlike SEPA, many of the requirements under MiFID are new, such as historical data capture to prove 'best execution'. This has resulted in a number of new technology companies which have been founded to meet specific aspects of MiFID. Capital Markets Technologies (CMT) has identified a number of these companies whose technologies will play an important role as each of the MiFID subdirectives comes into effect. CMT has also stayed closely aligned with a variety of MiFID working groups and think-tanks in order to better understand the roadmap which is unfolding around MiFID. Since MiFID requires business process re-engineering in the back office, there are a number of related market initiatives which have come into being as a by-product of MiFID's implementation. A good example of this is Euroclear's Common Communication Interface (CCI) initiative to simplify access to Euroclear by consolidating on a single access channel using SWIFT. This initiative means that hundreds of companies will need to modify the method by which they access Euroclear, again presenting an excellent opportunity to outsource their connectivity problem to SWIFT Bureaux.
Most financial services firms have yet to implement solutions which meet the demands of the new regulatory environment. It is highly likely that the technical solutions they will ultimately select will be flexible, costeffective, scaleable, and relatively quick to implement. This view is particularly applicable to the securities sector where hedge funds and asset managers cannot accurately project their activities in terms of assets under management etc., during the coming years and so do not want to be pinned to the purchase of an expensive up-front license for software which may not meet their requirements in the medium term. CMT is currently making solid in-roads into the securities sector by providing outsourced post-trade processing services around matching, reconciliations, reporting and SWIFT. The customers the company is now talking to are also leading it to prime brokers, custodians and other market participants. With the Euroclear initiative which brings CMT into contact with the brokerage market, it is CMT's intention to be able to 'touch' all areas of the securities market and add additional services to its outsourced platform as required by an increasingly important customer base.