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COMPLIANCE OFFICERS’ WORKSHOP

 

MiFID – Firms and Markets

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MiFID

• Agenda

• Overview

• Areas Applicable:

• Passporting

• MTFs

• OTC

• Transaction Reporting

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MiFID

• Agenda

• Conclusion

• Deliverables included in your packs

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MiFID

• Overview

• Commencement – 1st November 2007

• EU/EEA wide market opportunities

• The clear cost of implementation of MiFID will only prove justified if firms take the opportunities generated to raise revenues. (John Tiner)

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MiFID

• Overview

• Impact will vary between sectors

• Costs will vary depending on markets, instruments and complexity.

• Could be substantial if a Systematic Internaliser but also opportunities

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MiFID

• Passporting

• Arrangements similar to the ISD

• Several activities upgraded to being directly passportable (see pack)

• Investment Advice now directly passportable

• MTFs can be passported

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MiFID

• Passporting

• CFDs can now be directly passported

• MTFs

• MTFs can provide remote access screens

• Must notify the identity of its Members

• And location remote user screens

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MiFID

• Passporting

• Establishing a Branch

• Similar to current procedure

• Changes to Branch information needs to be notified

• Prior to the changes taking place

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MiFID - Branch

• Home Regulator• SYSC• Financial Resources• Client Money• Client Assets• Conflicts of Interest

• Host Regulator• Conduct of Business• Transparency• Transaction Reporting

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MiFID

• Passporting

• ISD Passports will automatically become MiFID Passports

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MiFID

• Multilateral Trading Facilities (“MTF”)

• Similar to current rules for ATFs

• Transparent Access required

• More detailed Pre Trade disclosures

• BUT, Waivers for certain types of trades

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MiFID

• Multilateral Trading Facilities (“MTF”)

• Post trade transparency

• More rigid and detailed requirements

• Now similar to those for a Regulated Market

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MiFID

• Over The Counter (“OTC”)

• Investment firms offering OTC products defined as an SI

• Systematic Internaliser definition:– Material Commercial role– Separate Staff– Available to clients on a regular basis

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MiFID

• OTC

• OTC for wholesale market not a SI

• Advise FSA by 1st December of SI services if in Shares

• Firm quotes only if for “Liquid Shares”

• Otherwise Quote on demand

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MiFID

• OTC

• Deal at quote price for Retail

• Price improvement possible for Professionals

• Order value must be over €7,500

• Possibility of batching retail client orders to achieve Price Improvement

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MiFID

• Transaction Reporting

• SUP 17 enshrines the current arrangements

• Uniform Transaction Reporting across all sectors

• Transaction Reporting Users Pack being prepared by FSA

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MiFID

• Transaction Reporting• MiFID Transaction Reporting

requirements• Only applies to any financial instrument

traded on a Regulated Exchange• Now includes Commodity Derivatives,

Interest Rate Derivatives and Foreign Exchange Derivatives

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MiFID

• Transaction Reporting

• Making a Report– Directly by the firm or a third party acting on

its behalf– By a trade matching or approved reporting

system– Via a Regulated Market or MTF

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MiFID

• Transaction Reporting• 23 fields to be completed• Little impact on Securities and Futures

firms• More impact on Investment Managers and

PIA firms• Derivatives should quote underlying

Securities code

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MiFID

• Transaction Reporting

• Firms must identify where an MTF has been used and which one

• To whom to report:

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MiFID

• UK

• FSA

• Other EEA States

• Local Regulator (not FSA as at present)

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MiFID

• Non MiFID Transaction Reporting requirements

• Transaction Reporting extended to:

• All OTC instruments based on equity or debt instruments; and

• Transactions on all “Prescribed Markets” such as AIM and OFEX

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MiFID

• Transaction Reporting

• Firm Capacity

• Principal or Agency reported currently

• Will change to:

• Proprietary; Principal for Client facilitation; Agency

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MiFID

• Conclusion

• Work is now urgent

• Impact for your firm needs to assessed

• Gap Analysis

• Budget the costs

• Drive forward via Project Team

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MiFID

William Macdonald

Managing Director

Craigcrook Management Services

198 Craigcrook Road, Edinburgh

Tel: 0131-312-7501 Mobile:07889-534743

Email: william.macdonald@craigcrookms.co.uk