Focusing on the three major elements embedded into the directive you will gain important insights into how the key aspects of this compulsory regulatory change affect you, these are:

• Multilateral trading facilities;

• Internalisation; and

• Best execution.

Providing you with a single source of information on the newly issued regulation, this book includes its practicalities and a review of the potential impact on the industry.  You will be given a practical understanding of the directive's impact on investment firms and develop a vision of the broader changes the directive will generate amongst industry players.

Bringing together the viewpoints of both academics and practitioners, possible ways forward are suggested and your understanding of how the industry will evolve over time will be increased.  You are provided an exclusive insight into the tools and techniques that you can use to support these new regulatory requirements.

This invaluable reference and guide will serve as essential reading material for you and should be recommended reading for investment firms representing the entire capital markets value chain, from exchanges and new alternative trading systems, intermediaries, money managers and end investors

Introduction

1. Markets in Financial Instruments Directive: A desire to better integrate European capital markets

2. The Development of Multilateral Trading Facilities and Electronic Communication Networks: A US example and the European reality

3. An Emerging Pan-European Level Playing Field: Execution as a commodity business

4. The Likely Impact of MiFID on Market Structures: Will transparency guarantee efficient and fair markets

5. Best Execution: The (in)Famous Provision: A journey with Sisyphus and Icarus

6. Transaction Cost Analysis: The state of the industry and research

7. A New Framework for Advanced Transaction Cost Analysis: The EBEX indicators

Appendix: Level 1 Directive

Glossary

Index

"A well-written, must read for all financial markets personnel involved in the planning for, and implementation of, MiFID. The book gives a clear understanding of what MiFID is and the implications and possible impacts of MiFID in all corners of the financial markets. In particular the new classifications of Multilateral Trading Facilities and Systematic Internalisers are well-explained and the issues of best execution and transaction cost analysis are clearly defined and their importance within the context of MiFID highlighted. I highly recommend this book."
Dr Andy Cooper, Director, Financial IT Limited

Book Review: MiFID — Convergence towards a Unified European Capital Markets Industry by Jean-Rene Giraud and Catherine D'Hondt (Risk Books)
Complinet 16 January 2008

Angela Short, solicitor, Nabarro

Mention the Markets in Financial Instruments Directive in London and one is peppered with groans and moans as to expense and bureaucracy. The book ″MiFID — Convergence towards a Unified European Capital Markets Industry″ by Jean-Rene Giraud and Catherine D'Hondt (Risk Books) published in 2006 opens with the ominous quote, ″It's coming and there is no escape: a nightmarish, alien creature…this horror story is the Day of the MiFID″. It all sounded very Halloween to me.

I am a compliance lawyer from Australia and knew little of MiFID until I planned to grab an umbrella and pursue a career in England. This MiFID sounded very ominous, especially when the media snapshots were my first introduction to it after a search on Google. Any new directive that covers the number of jurisdictions and increases competition as MiFID does is bound to seem like a monster.

One of the books passed to me in my quest to make sense of this feared directive was the Giraud and D'Hondt book, published at the time that the draft level two regulations were released. I dismissed it immediately given that the detail of MiFID changed and evolved almost daily.

I was too rash, however. My primary sources of information as to the detail of MiFID were materials issued by the regulator and handbooks developed within the industry, however, the Giraud and D'Hondt book complemented my research brilliantly. The book has been superseded in terms of the detail of the directive, however, it provides an excellent commentary on the history of MiFID (a wonderful preface for the dizzy antipodean lawyer) and discussion of its primary concepts. In this sense, it serves as a textbook rather than a handbook.

The book deals with the important areas of the directive (best execution, transparency, the emergence of multilateral trading facilities and the old chestnut for regulators across the globe, conflicts of interest) and has a perhaps limited glossary at the back. It does provide interesting insight into the primary elements of MiFID, although the text is suspended in time.

One is well-served to have the Giraud and D'Hondt book in their library and within easy reach. With a MiFID handbook and the regulator's guide in the one hand and the Giraud and D'Hondt book in the other, one will gain an understanding of the minutiae and requirements of MiFID and the rationale behind it. In this context, MiFID becomes less like Halloween and more like the less-celebrated All Saints Day which follows. After all, MiFID did come into effect on All Saints Day.

The old-hand's view
Rob Moulton, partner, Nabarro

I could not, at first, understand why a book on MiFID would have much appeal. The directive has been in writing for some time, but the topic is surely too fast moving to be captured for posterity?

The book solves this conundrum by not attempting to cover MiFID in all of its breadth. Instead, it concentrates solely on the parts that affect the market infrastructure. There is much more coverage of the matters set out in the MiFID implementing regulation than in the implementing directive. In fact, the book is a very useful background work for those trying to piece together the jigsaw that is the European trading infrastructure. Its analysis of, for example, the impact of new best execution requirements is less informative than the general discussion of the future of quote-driven and order-driven systems and newer hybrid trading models. I found some of the diagrams and discussions illuminating when they looked at the way the market worked, or intended to work, but not so helpful when they summarised the technicalities of the legislation. The treatment of transaction costs in the light of MiFID, as an example, is a great illustration of a number of matters that MiFID itself either glosses over or simplifies.

I would say that this book is a useful introduction either for a MiFID newcomer (who does not need to be up-to-date with the day-to-day detail of the directive) or, more probably, a lawyer or compliance officer who is being asked to work with a cash equities trading team for the first time. It would have been useful as a description of the trading infrastructure without the impetus that MiFID undoubtedly gave it — but it is too narrow to be looked on as a MiFID guide.

Rob Moulton is a partner at Nabarro Nathanson. He specialises in providing legal and regulatory risk management advice to firms regulated by FSA.
Angela Short is a solicitor in the financial services and funds team at Nabarro.

Jean-RenéGiraud is C.E.O. of EDHEC-Risk Advisory, the consultancy arm of the EDHEC Risk and Asset Management Research Centre for which he is also Director of Development. Prior to joining EDHEC, Jean-René spent several years at various positions within investment banks and management consultancy firms in London. He began his career in Paris, where he supported the development of a software company specialised in portfolio management and led the client advisory activity of the firm. Jean-René is a frequent speaker in industry and academic conferences on subjects including risk management, alternative investments, market microstructure and market regulation.

Catherine D'Hondt is an associate professor at EDHEC Business School in Lille with her primary research area in market microstructure and a special focus on traders' behaviour and order submission strategies. Having had the opportunity to present most of her empirical works at several high quality international conferences, she currently teaches in the area of financial markets and assets.