A set of sweeping reforms to Europe's financial industry came into force on Wednesday, with market participants in every corner of the continent's financial services system likely to be affected.
The new laws, which amount to the biggest change to Europe's financial markets in a decade, are an attempt by regulators to shine more light on how and when assets are traded.
"People are waiting to see what the person to their left and to their right does," Jake Green, financial regulation partner at Ashurst, told CNBC on Wednesday, adding that he anticipated low liquidity over the coming days and weeks.
While Green said the long-awaited introduction of sweeping reforms would finally provide market participants with some clarity, he insisted it remained a "seismic event" poised to shape how European financial markets operate for years to come.
What is Mifid II?
The European Commission, the executive arm of the EU, kick-started the launch of the legislation, known as Mifid II, after the original set of rules was found wanting in the wake of the 2008 financial crisis.
Anyone buying or selling stocks, bonds, foreign exchange, commodities or exchange-traded funds (ETFs) will be affected by the new standards.
"Will there be people who sit back and watch and see how markets develop? Absolutely, there will be. But it is important to recognize the longer-term change that this represents for the industry," Rebecca Healey, head of EMEA market structure and strategy at Liquidnet, told CNBC on Wednesday.
The original Mifid arrived in November 2007, just as the dam of the financial crisis was about to break wide open. Its intent was to help Europe integrate its disparate financial markets and drive down trading costs.
Its main focus was on stocks, but now Mifid II aims to widen the rules to incorporate other asset classes.
It is also an attempt to better regulate over-the-counter (OTC) contracts, which involve direct transactions between a buyer and a seller, by pushing them on to exchanges.
New rules are 'incredibly patronizing'
European financial regulators say the new rules will improve investor confidence and strengthen the industry.
In November, Erste Bank CEO Andreas Treichl said the introduction of Mifid II was "incredibly patronizing" and akin to treating both banks and clients "like little kids who don't know what they're doing."
The new regulation also forces fund managers to pay brokers and banks separately for research and trading services, rather than just one combined fee for both activities.
It is explained as an attempt to increase transparency within fund management, as clients will directly see how their money is being used. It has been widely reported that most asset managers will absorb the costs with the likely effect that overall spend on analysis will fall.
— CNBC's David Reid contributed to this report.