According to the international wealth management group Credo, the introduction of the Markets in Financial Instruments Directive has led to unexpected opportunities for smaller wealth managers in the execution-only sector. Stephen Davis at Credo said: “MiFID means that brokers must vet execution-only clients wanting to deal in “complex products”, such as derivatives. These clients must now be subjected to an appropriateness test to establish their level of financial sophistication. Brokers must also establish whether these potential clients can meet a certain level of liquidity. This has created an additional cost to brokers. As a result, some of the larger houses are moving away from execution-only trades for private clients, as the cost of compliance outweighs the potential profits. Many smaller wealth managers already have systems in place to vet and profile clients. Some are already beginning to capitalise upon this, and we expect this trend to continue.”