The UK's Financial Services Authority (FSA) is encouraging senior management at regulated firms to begin preparing for the implementation of the European Union's Markets in Financial Instruments Directive (MiFID), which is likely to come into force on November 1, 2007.
The FSA has published ‘Planning for MiFID’, a factual document that provides a short guide highlighting the key areas, such as conduct of business and systems and controls requirements, which will be affected by the directive and the likely main practical implications for regulated firms.
It has also published the International Regulatory Outlook (IRO) which analyzes regulatory change that is being driven by European and other international initiatives and its likely effects on UK financial services.
The FSA says the directive will have a significant impact on financial services regulation and how firms operate and interact with customers.
Hector Sants, the FSA’s managing director for wholesale business, said:
The introduction of MiFID will affect most FSA-regulated firms carrying on investment business, whether or not that business falls within MiFID’s scope. The implementation of the directive is a major challenge, both for the FSA and for industry and, while November 2007 may seem a long way off, preparing to meet the challenge cannot begin soon enough.
This planning document, along with the IRO, is key to helping firms understand how their businesses will be affected by regulatory developments over the next few years and what they need to do to plan for the future.
As significant aspects of the MiFID package have yet to be agreed at European level the FSA cannot be certain at this stage about the final detail of the legislative requirements. The Treasury and the FSA will consult on the UK implementation of the directive, when the final details are published, during 2006.
The IRO is designed to help firms identify measures that will affect them and start planning accordingly. For measures already in train, it encourages them to put forward their views at an earlier stage when they have the best chance of influencing policy formation.