The City will have its fingers crossed this morning as it turns on systems after an overnight switch to new trading rules that will transform the European securities market.
Banks, brokers, fund managers and other financial firms would have preferred to make the change over a weekend to test their systems. They would have been able to do so under the original schedule but an extension of the April 2006 deadline by 18 months meant the change took place midweek.
The European Union's Markets in Financial Instruments Directive (Mifid) is one of the biggest changes to hit Britain's securities industry since the Big Bang of 1986, which ended trad-itional barriers between businesses and heralded the foreign takeover of many of the City's biggest names.
Mifid will create a single European market and consolidate the regulatory regime for financial instruments such as equities and derivatives. It is meant to increase competition by allowing banks and new trading platforms to compete with established stock exchanges.
Last night, activity at one investment bank was said to be "pretty frantic". Industry sources reported that computer systems were in place but that there was a backlog of revised agreements because many clients had not yet signed and sent back their contracts.
There will be time to iron out glitches because Mifid is a more gradual process than the introduction of the euro or the switch to year-2000 computer systems.
Octavio Marenzi, the chief executive of consultancy firm Celent, said: "The Fin-ancial Services Authority will give people a lot of leeway. The regulators aren't going to come and shut someone down because they are not completely ready."
Indeed, many European countries, such as Spain and the Czech Republic, are far from ready for the changeover, which has been brewing for nine years.
The Confederation of British Industry welcomed Mifid, which it said would benefit Britain's powerful financial services industry. But Richard Lambert, CBI director general, added: "It is important that member states which fail to meet today's deadline are pushed to implement it in full as soon as possible to ensure uniformity across the EU."
The FSA estimates that total one-off costs to UK firms are up to £1.2bn, with contin-uing costs of £100m a year. The regulator estimates that benefits from the changes will be up to £200m a year.
The FSA will review implementation of Mifid in the first quarter of next year, when it will discuss difficulties firms may be facing. In the second quarter, it will make its supervision more formal and include oversight of the changes into its regular supervisory checks.