FSA chief bemoans City's IT burden
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New regulations add 1bn to IT costs.
26 July 2005 The head of the UK's city regulator the Financial Services Authority (FSA) has criticised "deeply unsatisfactory" EU regulations which could force institutional investors to spend an extra €1 billion on upgrading IT equipment.
The head of the FSA Callum McCarthy said the Market in Financial Instruments Directive (MiFID) was introducing an unnecessary burden on the UK's financial services companies.
In his AGM statement, McCarthy said: "It is deeply unsatisfactory that UK financial services firms face major changes, with the associated costs, for an initiative which has been subject to no comprehensive EU cost-benefit analysis."
Analyst house Celent recently reported that the additional IT costs necessary to comply with MiFID will exceed €1 billion.
Requiring financial services companies to make that investment without having carried out a detailed examination as to whether the regulations would deliver economic benefits through the integration of the European capital markets was unjustified, added McCarthy. "It is far from clear that the benefits to the UK will outweigh the costs."
He added that the level of regulations being imposed on the financial services industry represented a "significant hazard".
The MiFID regulations are intended to bring in common rules and definitions across European capital markets and to prevent countries putting in place expensive artificial barriers to easy cross border trading. The regulations are due to come into force on 30 April 2007.
