Financial firms are exposing themselves to a range of damaging new threats by rushing to comply with the EU’s Markets in Financial Instruments Directive (MiFID) November deadline.
The stark warning came from a panel of security experts which said institutions need to pinpoint potential flaws in their security – or face the financial consequences according to IFAonline.
They warned that the cost of MiFID IT implementation in the UK alone, is set to top £1bn, with typical UK investment banks spending upwards of £10m each.
'MiFID implementation is complex, involving the coordination of resources across many departments in investment firms,' said Phil Higgins, executive partner at the technology experts Brookcourt.
'Only a tiny number of firms look like they are on track to hit the 1 November deadline, while the vast majority face a range of challenges over the coming months in their journey to compliance,' he added. 'But as firms get to grips with identifying and storing the vast amounts of information required by MiFID, they need to be mindful that it will expose existing flaws in their security, as well as introduce new threats that they will now have to manage.'
Security issues highlighted by the security panel’s research included: the importance of building security into record keeping processes – ensuring the long-term integrity and security of records, and new risk drivers, which are increasing existing risk and introducing new internal and external risks.
In addition, the panel warned that firms which do not tackle security issues raised by MiFID will substantially raise their risk profile and leave themselves open to both reputational damage and legal action.
'With only six months left until ‘M’ day, firms are waking up to the profound implications MiFID has on business processes and supporting infrastructure,' said PJ Di Giammarino, CEO of financial services industry think tank JWG-IT.
'While it’s important to implement compliant processes and systems, these also need to be secure.'
Further reading:
FSA praised for adopting MiFID rules
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