MifId - Opportunity Or Challenge?What Is MiFID? The Markets in Financial Instruments Directive The Markets in Financial Instruments Directive (MiFID) will introduce a single market and regulatory regime for investment services across the 30 member states of the European Economic Area (the 27 Member States of the European Union plus Iceland, Norway and Liechtenstein). (MiFID) was once famously fa·mous·ly adv. 1. In a way or to an extent that is well known: "his famously neurotic mannerisms [are] lampooned in the novels of Evelyn Waugh" described by a financial journalist as "a horror story horror story Story intended to elicit a strong feeling of fear. Such tales are of ancient origin and form a substantial part of folk literature. They may feature supernatural elements such as ghosts, witches, or vampires or address more realistic psychological fears. as awful as Day of the Triffids". Indeed, MiFID is probably the most significant regulatory event since N2 and will present the UK financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry with one of its biggest challenges to date. Firms will be required to carry out a massive reassessment Reassessment The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. of their businesses and to change their documentation requirements in a wide range of areas. But it is not all bad news. MiFID will offer opportunities in the arena of cross-border marketing and should contribute to a more level playing field See net neutrality. for financial services. MiFID will bring about major changes to the FSA FSA Financial Services Authority FSA Food Standards Agency (UK) FSA Farm Service Agency (USDA) FSA Financial Services Agency (Japan) Handbook, including an extensive rewrite of the conduct of business rules for investment services. It also broadens the scope of the European passport A European passport is a passport issued by a member country of the European Union to its citizens. European passports share common design features[1] such as the burgundy coloured cover, the use of the words "European Union" (before 1997: "European Community") in 12 of to include additional services and financial instruments. It applies to a wide range of firms and financial institutions and there are comparatively few that will not be affected in one way or another. Key Provisions Of MiFID MiFID's impact on UK firms will depend upon the type of firm and its business. The following sections take a brief look at some areas of MiFID that are likely to have the most impact on the majority of firms. Client Classification As with the current requirements, MiFID provides for a three-tier system A Three-tier system is any system that has three distinct levels.
Best Execution The proposed rules differ significantly from existing UK rules. The new rules will apply to professional and retail clients and to all traded instruments. Information Disclosure And Transparency, Pre- And Post-Trade Once MiFID is implemented, equity pre-trade and post-trade transparency requirements will be based on three types of execution venue: regulated markets A regulated market is the provision of goods or services that is regulated by a government appointed body. The regulation may cover the terms and conditions of supplying the goods and services and in particular the price allowed to be charged. , multilateral trading facilities and over-the-counter. Organisational Requirements The MiFID requirements are more extensive than the FSA's current handbook in relation to organisational requirements, although the new requirements should not need too much fundamental change. Nevertheless, firms will need to review their systems and procedures with MiFID in mind. The main areas of impact for most firms will be: governance, internal controls and organisation conflicts of interest risk management and compliance employees and agents outsourcing record keeping. Conclusion The progress of MiFID has been extremely long and drawn out, with a lengthy process of consultation, debate and much disagreement among the Member States. Even though the final rules have now been published, there is still a good deal of uncertainty in a number of areas, e.g. best execution as to how MiFID will be implemented in the UK. Nevertheless, firms will be required to implement MiFID by 1 November 2007, which is not that far away now, and for most firms, there is still a great deal of work to be done. Despite the remaining uncertainties, MiFID preparations should be well underway in all firms, and if not, they should start now! The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Smith & Williamson 25 Moorgate London EC2R 6AY UNITED KINGDOM Tel: 207131 4000 Fax: 207131 4029 E-mail: info@smith.williamson.co.uk URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. : www.smith.williamson.co.uk Click Here for related articles (c) Mondaq Ltd, 2007 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com |
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