MiFID to spur recruitment

Investment banking IT specialists waiting for next big thing to hit their industry could do worse than casting an eye in the direction of MiFID.

The Markets in Financial Services Directive (MiFID), is due to be enforced from April 2007. Those in the know warn it should have definite repercussions for technology jobs in the financial services sector.

"There will definitely need to be changes to existing technology systems, and some players may need to build entirely new systems," says Bob Fuller, a director of IT at Dresdner Kleinwort Wasserstein and co-chairman of the IT subject group of the MiFID Joint Working Group. He says, "In the next two or three months there will be a need for business and scenario analysts who really understand the business and the new requirements."

Much of the IT activity is likely to centre on the provision systems for so-called 'systematic internalisers.' Under the directive, a systematic internaliser is defined as any institution executing more than 15% of trades internally without going through a regulated market. All systematic internalisers will have to provide investors with on and off-exchange prices for a trade in real time and that information must be retained for the following five years.

"If someone wants to be a systematic internaliser they may need to invest in new systems looking at price publication," says Fuller. "They will need to act like mini exchanges and publish prices, which they don't do at the moment."

A report from Celent, a market research firm, suggests compliance with MiFID will also necessitate investment in order management, order matching and order routing systems, as well as quote engines, market data handlers and trade history systems. It puts the total cost at €1.15bn.

Octavia Marenzi, a consultant at Celent and the report's author, says the directive will prompt banks to bring in external IT consultants to assess their requirements: "The problem becomes that there is no one out there with experience of implementing MiFID," he says. Longer term, he says banks will need people with expertise in order management and market data systems.

Fuller forecasts a spate of MiFID-related hiring in Q2 and Q3 2006: "By this time we'd expect to see banks changing their existing systems or implementing new systems from suppliers." However, he says much of the work is likely to go to contractors. "Realistically, banks should be looking at using contract resources rather than hiring an additional people for an 18-month job."

IT recruiters say enquiries about MiFID are currently non-existent. "I don't think anyone's even begun to think about it," says Michael Lapin at recruitment firm Mantis Partners. "People just aren't ready: people don't even know whether the framework for MiFID is finalised, let alone what the systems are going to be."