London finance companies' £1bn bill

News Article - 28 November 2006
Category: Business

Financial companies within the European Union may have to pay around £1 billion under a new directive, according to the Financial Services Authority (FSA).

The new Markets in Financial Instruments Directive (Mifid) may bring a significant additional compliance cost of between £870 million and £1 billion for firms operating in the financial district of London.

Benefits of complying with the new directive are expected to reach £200 million, however £100 million is likely to be incurred in yearly costs, states the Financial Times.

The FSA's managing director of wholesale and institutional markets, Hector Sants, advised companies to consider the positives posed by the directive rather than focusing on the negative aspects.

"It is clear that implementation of Mifid represents a substantial cost to industry particularly in the upfront years, but it does create the potential for revenue opportunities over the longer term," he said.

"We would encourage firms to focus on these opportunities."

Implementation of the directive is expected to reduce transaction costs however the study found that barriers such as tax would need to be removed for potential benefits to be higher, the publication reports.

Article keywords: finance, eu, european union

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