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UK investment banks face costs of at least £10 million each to ready themselves for the directive, thanks in large part to the measure's data security implications, said PJ Di Giammarino, chief executive of MiFID think tank JWG-IT and former senior IT professional with Barclays Capital. The total cost to the UK banking sector will easily surpass £1 billion, he predicted.

MiFID legislation will take effect after November of this year, giving banks, portfolio managers, stockbrokers and corporate finance firms a deadline for complying with its complex rules. The overall aim of MiFID is to create a single European market for all financial instruments.

'Security and performance-related issues

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will of course be absolutely fundamental to the success of an organisation's MiFID implementation,' said Di Giammarino.

'You need, for example, to securely store all data for at least five years, but be able to prove you did it in a certain way to the regulatory authorities. This is not going to be easy for everyone, complexity depending on what products you are offering.'

Di Giammarino said the directive also dictates knowing in much more detail than previously required information about who you are doing business with, and being able to prove what data is being accessed by whom.

'It's not just a security headache for the big banks. We've calculated that there are as many as 7,000 organisations in the UK alone affected by these laws,' he said.

Phil Higgins, executive partner at Brookcourt Solutions, also speaking at InfoSecurity, said the news should not be seen by banks as all bad.

'There are some key benefits they can expect out of MiFID compliance,' he said. 'But be warned that implementation is going to be complex, involving the coordination of many departments in investment firms. Those who get it right will gain competitive advantage, but those who get it wrong risk litigation from customers, fines from regulators and tarnished reputations.'