The financial impact of MiFID in the Maltese financial services sector

Abstract

Purpose: This research was aimed at establishing an understanding on the financial impact of MiFID in the financial services sector. The dissertation was prepared, based on the following objectives. Firstly, to gather an understanding of how the market participants function and handle compliance issues with respect to MiFID, secondly, to determine the costs/benefits incurred from the major requirements dictated by MiFID, and finally, to institute a conclusion based on the results obtained in reaching the above objectives. Design: An overview of pertinent literature is given, followed by the presentation and discussion of findings stemming from the 14 questionnaire responses, and the 6 semi-structured interviews conducted. Findings: The major issue that was noted in conducting this research was that, whilst the MiFID aimed at achieving far-reaching goals that would positively affect both the investor and the investment firms, the most common answer given by the respondents was not mutual, and no benefits could be identified particularly due to MiFID. Many License Holders complained of the MiFID, and saw it as an increase in paperwork and compliance costs, which consultant and specialist firms benefitted from. On a more positive note, in general, costs associated with MiFID turned out to be low and there has been an increase in Investment Services Licenses issued, throughout the years. License Holders also claimed that a possible benefit that their clients enjoyed, was that of increased investor protection. Conclusions: MiFID is seen as an increase in costs for License Holders, which also provides very little intangible benefits. Notwithstanding this statement, the majority of the market players argue, that there was a need for a well regulated market.