A new European directive hints things to come for Middle East

27 January 2006 BY LUCIA DORE (SENIOR CORRESPONDENT)

DUBAI — The European Commission's Markets in Financial Instruments Directive (MiFID) will fundamentally change the way the capital markets operates across Europe, the intention being to enhance the market's connectivity, efficiency and transparency.

... TowerGroup argues that banks that have traditionally relied on legacy infrastructures are being forced by MiFID to rationalise the complete range of their connectivity. And because MiFID requires transparency in the European investment markets, investment houses have to open up what were once private networked systems to open access systems using Extensible Markup Language (XML) standards.

... By the time MiFID comes into effect in 2007, most asset managers and brokers will have determined to use a single standard in the pretrade environment. As a pretrade standard, FIX will clearly be the choice because European buy-side and sell-side firms want to use a single standard that is community owned and neutral.

TowerGroup believes that, as a result, other language and definition groups, such as MDDL, FpML, and reference data standards, will focus their operations on interoperability and conformance with the FIX Protocol. FIX will thus become the standard for pretrade and trade connectivity - a fact that investment houses across the Middle East must remember when implementing their own technology and setting their own standards.