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MegosztomFinance players make money both when things are going badly and when they are going well. But the crisis has brought an end to abundant money, and many believe that the golden age will never return. But what is in store for the financial services sector? We spoke with Chris Pickles, in charge of marketing for BT's global investment bank clients, who previously worked on the directive that regulates the EU's financial markets.
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hvg.hu: In the midst of the crisis, everyone is talking about the need for tightening up on market rules. You led the group that drew up the EU's financial markets directive. What does this new regulation mean for financial sector players?
C.P.: The European Commission came up with a financial regulation framework - MiFID - which creates more intense competition on the financial markets, but also harmonises the regulations in different countries. Some 500 people from five different sector groups in six European countries worked on this. The rules affect the entire industry, from banks to data providers to traders. The sector is going to undergo major changes in the future.
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hvg.hu: So what can we expect?
C.P.: Thanks to MiFID, many of the changes have already taken place with the stock exchange mergers. The New York Stock Exchange bought Euronext, and with it the Paris, Amsterdam, Brussels and Lisbon exchanges. The Scandinavian exchanges now belong to Nasdaq. So that's not the result of the crisis. But the crisis will bring efficiency gains. Until now, financial companies have dealt with problems by increasing expenditures - filling the gaps with money. The situation will now force them to rethink their business models, making them more effective.
hvg.hu: So you think the crisis will speed up these rationalisation processes?
C.P.: The crisis is just a component of this transition, but there's no doubt that this is a perfect example of how exposed we are when a crisis comes. Now everything will change. The EU rules will force the sector to undergo structural changes, while the crisis will force people to be more cost effective. A shortage of money means companies can no longer solve things just by spending more.
hvg.hu: Won't the new economic situation force changes to the regulatory framework?
C.P.: The Commission emphasised that it will not change the regulation retrospectively because of the crisis. MiFID tightens up on regulations, and lack of regulation was one of the causes of the crisis.
hvg.hu: Haven't financial firms being worrying that the directive will increase their costs? Are they right to be concerned?
C.P.: The initial costs of the programme to the financial sector are estimated at E6.5bn - that was before the crisis. It's an expensive programme, but every market player has a commercial interest. We shouldn't forget that finance houses make money both from efficiency and inefficiency.
