A majority of European institutional investors believe that new financial market rules have a good chance of achieving regulators’ stated goals of increasing market transparency and further integrating Europe’s capital markets, reveals new research from Greenwich Associates.

The Markets in Financial Instruments Directive (MiFID), which will take effect on November 1, will introduce significant changes to Europe’s regulatory framework with the goal of integrating Europe’s national markets. Included in the directives are new pre- and post-trade transparency requirements and reporting requirements for equity markets, new capital requirements and other provisions intended to facilitate cross-border business.

More than half the institutions participating in Greenwich Associates’ study on the subject believe that MiFID will increase the transparency and depth of European equity markets, while slightly less than a quarter expect reductions; 35% expect MiFID to increase liquidity in European equity markets, while 20% expect it to reduce liquidity. “Half the institutions we interviewed say MiFID will increase clients’ ability to measure and achieve best execution, while only 17% think the rules will make it harder for clients to assess best execution,” says Greenwich Associates consultant John Colon.

However, more than three-quarters of the institutions believe that MiFID will place mid-sized and regional brokers at a disadvantage, and 55% think the new rules favor major broker-dealers. “Our research suggests that the benefits of the new regulations will not be evenly distributed,” says Greenwich Associates consultant Jay Bennett. “Europe’s institutions expect that there will be winners, including the institutions themselves, large broker-dealers and electronic trading venues — which will benefit from the integration of markets and new requirements governing best execution and transparency. They also believe there will be losers, including smaller broker-dealers and exchanges.”