Nordic Securities

MIFID Connect is a joint project designed to support member firms and simplify the UK implementation of the Markets in Financial Instruments Directive (MiFID). Statutory implementation in the UK will be carried through by the HM Treasury and by the FSA making rules in its handbook. It will also require firms to introduce a whole series of changes to their systems, documentation and order-handling procedures. While the guidelines are focused on compliance with UK rules we recognise that given the pan-European application of MIFID there may be aspects of these guidelines which may be useful in other jurisdictions. It is a matter for the regulators of other member states and, so far as relevant, their financial services industry participants to decide the extent to which issues covered by the guidelines may be capable of being dealt with in a similar way in their member state.

10 January 2007: The five draft MIFID Guidelines posted on this site are Application of : Investment Research Requirements, Suitability and Appropriateness Requirements, Best Execution Requirements, Conflicts of interest Guidance and Outsourcing Requirements.

During the period from 10th January 2007 (the date of publication on the website) until these five guidelines are finalised MIFID Connect shall be focusing on concluding these guidelines and they will be published at a point as soon as practicable after the FSA Rules relating to MIFID are finalised.

The Association of British Insurers (ABI), The Association of Private Client Investment Managers and Stockbrokers (APCIMS), Association of Foreign Banks (AFB), The Bond Market Association, the British Bankers’ Association (BBA), Building Societies Association (BSA), the Futures and Options Association (FOA), The International Capital Market Association (ICMA), Investment Management Association (IMA), The International Swaps and Derivatives Association (ISDA) and the London Investment Banking Association (LIBA) have established a joint programme for reducing the legal risk and simplifying the implementation of the Markets in Financial Instruments Directive (MiFID). The Associations believe it is essential that firms are able to implement these requirements in a way that is practical, cost efficient, market sensitive and does not import high levels of legal uncertainty and regulatory risk into customer relations and market dealings. In order to address these issues on an industry-wide basis, working with the international law firm, Clifford Chance, have embarked on a five-stage programme of work for establishing an industry approach towards implementing MiFID which includes:

1. - Developing a set of industry guidelines to assist firms in areas of MiFID implementation which carry a high degree of legal risk and/or legal uncertainty.
2. - Producing specimen industry documentation necessary to comply with the new MiFID requirements.
3. - Providing, through 2006, a series of implementation courses and individual specialist workshops on the practical problems and issues surrounding implementation of MiFID.
4. - Publishing a two-part “Survival Guide”, the first part of which (to be issued in the second half of 2006) will comprise a timetable and strategy for firms to manage progressively a programme of implementation. The second part (to be issued in 2007) will comprise a “tick box” checklist covering all the changes that firms will be expected to introduce by the final agreed date of implementation.
5. - Issuing, through 2006, periodic releases and updates covering timelines and regulatory progress towards finalising the new requirements.

Guidelines
 
- Draft guidelines relating to the FSA’s expected UK Rules implementing MIFID and consequently intended to apply within the UK rather than further afield.

- Subject to review and comment by the FSA (although initial comments have been received from the FSA on some of them - see the front of the guideline for an indication of which ones have received FSA comment).

- Draft guidelines developed by industry trade associations and their members, not by the government of the UK or the Financial Services Authority.

- Based on draft FSA text published in FSA consultation papers rather than the final FSA Rules which will not be available until the end of January 2007.

- Subject to modification in the light of further comment.

Nonetheless MIFID Connect considers it to be useful to publish them on its website at this point:

(1) As an indication of current UK industry thinking on the issues covered by the guidelines.
(2) So that those who have not worked closely on the development of the drafts will be free to comment (comments please to mifidconnect@bba.org.uk).
(3) As an aid to dialogue with others elsewhere in Europe who are considering implementation issues (e.g. regulators and financial services industry participants).