With less than 100 days to go before Markets in Financial Instruments Directive (MiFID) comes into force, half of financial firms surveyed said they are unhappy with the support they are receiving from national regulators.
In a quarterly poll of 300 investment firms, half of the respondents said their national regulators were either "bad" (32% or "very bad" (19%) in helping them prepare for the European directive.
At the time of writing, only five EU member countries has transposed the European directive into national law, which means many regulators have not produced MiFID guidance for financial firms.
Only 53% of firms surveyed said their preparations for the directive are "ahead" or "right on track", compared with 34% in September 2006, according to research released by software provider SunGard and research firm TradeTech.
Although this shows an overall increase in MiFID readiness, it reveals that almost half of firms are struggling in their preparations to meet the 1 November deadline.
In the UK, respondents were divided on whether the Financial Services Authority's (FSA's) principles-based guidance, considered minimal, was good or bad. While 54% believed this was the best way to prevent regulatory overload, the rest said the approach makes it difficult to understand exactly what the FSA wants.
Overall, just 50% believe they understand how to ensure and prove best execution, which is one of the key requirements under MiFID.
Best execution used to be evidenced with a pre- and post-trade statistical analysis of trades, but under the directive firms need to show they have found the optimal mix of price, cost, speed and likelihood of execution, which increases pressure to keep a full transaction record.
However, record-keeping is an area where the results show a dramatic improvement, according to SunGard. More than half of respondents now believe they would be ready to handle record-keeping requirements, with only 12% indicating they wouldstruggle.
In the past, industry commentators, including the FSA, have said that MiFID will generate opportunities, as it opens up the EU markets for competition, which could mean more liquidity for traders and revenue opportunities over the longer term. However, most firms can't see the positive impact of MiFID. The majority (54%) see MiFID as just "another piece of compliance".
In addition, only 42% of respondents believe that MiFID will be good for Europe's economy in the next five to 10 years, with more than a third undecided.