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.

hvg.hu: What kind of changes could come to your sector?

C.P.: BT could gain from this, since the financial sector will have to improve its effectiveness, and that's what we do. BT operates the world's largest financial network, our clients comprise the majority of banks and brokers. However, this is not the main profile of the financial institutes, so most often these are outsourced. This could even lead to a market expansion.

hvg.hu: What kind of growth are you expecting?

C.P.: To be honest, we haven't even tried to estimate it. We're trying to assess the impact of the crisis. In terms of the market, we expect financial institutions to spend money only on things that create added value. There will be big changes on the markets - acquisitions, bankruptcies, new players. It's also likely that companies will use their existing infrastructure, but more effectively.

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hvg.hu: So it looks like your sector will be one of those least affected by the crisis. How do you expect to emerge from this?

C.P.: It's clear that we can't escape the effects of the crisis, but it's certain that it will affect us differently. We don't expect to have fewer clients, because they won't be cutting their cables saying let's not communicate any more.

hvg.hu: But some of them will go bankrupt.

C.P.: There'll be some rationalisation. If two big clients merge, as happened with Bank of America and Merryl Lynch, they'll get rid of the duplicated functions, but it's likely that they'll want to make their system more efficient. Rationalisation allows companies to make huge savings. Our aim is not to come out of the crisis worse off.

hvg.hu: And which regions will do best? Do you think that what you lose in Europe or America you'll make up in Asia?

C.P.: The markets won't balance each other out. The whole world has changed as a result of the crisis. It's clear that the situation won't be the same as it was before. But our previous focus on Asia and the Pacific Rim could pay dividends. In the short term - the next 18 months - we expect there to be opportunities as investment banks in this region will keep building out their infrastructure. In the mid-term, we have high hopes for the Middle East and eastern Europe. In the long-term, South America, Russia and India will be the focus. These are long-term prospects, because it takes several years' work to become profitable in these markets.

hvg.hu: Isn't it too optimistic to focus on eastern Europe in the mid term?

C.P.: These countries will be affected, but we see growth opportunities. In eastern Europe, banks are set to do well. They'll keep opening branches to get clients, and that will require expanded IT networks.

hvg.hu: From a technological point of view what kind of changes can we expect?

C.P.: Operational risk management has to become quicker, because trading is growing ever faster on the markets. Data volumes have increased dramatically - 15 years ago, 200 messages a second was the norm, now it's 1.4m messages a second - and financial institutions have to be able to deal with this, because this is information that affects the world's markets. But if there is less money on the markets, then it has to be made to work harder. Efficiency means this has to be done more quickly and with better risk management. So that's why I think the importance of risk management will grow in the future.

Zsuzsanna Szabó