Title: Implementation of MiFID
1Implementation of MiFID
- Legislative Adjustment New Rules and Regulations
Introduced by the New Directive
Matja Albreht Assistant Director The Slovene
Securities Market Agency Split, 14. 15. June
2007
2Disclosure
- Any views expressed in this presentation do not
necessarily reflect views of the Slovene
Securities Market Agency.
3Agenda
- About MiFID
- Financial Instruments Market Act (FIMA) in
Slovenia - Status of adopting FIMA timetable
- Novelties introduced by FIMA
- Impact of MiFID on the EU accession countries
4VISION
Markets in Financial Instruments (MiFID) would
play an important role in the wider European
economic reform agenda given the contribution
that deep and liquid capital markets can make to
encouraging investment, innovation, growth and
employment.
5Financial Instruments Market Act
- Markets in Financial Instruments Directive will
be implemented in Financial Instruments Market
Act (FIMA) in Slovenia, which will represent new
legal environment for Slovene capital market and
will replace the present Securities Market Act.
6New Legal Framework in the Slovene Capital
Market FIMA
- It will replace the present Securities Market Act
(adopted in 1999). - It is fully harmonized with the following main
Directives - Market Abuse Directive MAD (2003/6/EC)
- Prospectus Directive (2003/71/EC)
- Markets in Financial Instruments Directive MiFID
(2004/39/EC) - Transparency Directive (2004/109)
- ... and other directives 89/117, 97/9, 98/26,
2001/34, 2003/124, 2003/125, 2004/72, 2006/48,
2006/49 - and regulations 2273/2003, 809/2004, 1287/2006.
7Process of adopting FIMA
FIMA should be in reading in Parliament
MiFID entered in force
FIMA should enter into force
30.04.2006
01.07.2007
15.08.2007
TIMELINE
TIMELINE
31.01.2007
01.11.2007
01.08.2007
MiFID should be transposed by Member States
MiFID measures should be applied by industry
FIMA should be published in Official Gazette of RS
All executive acts should enter into force
8Transposition delayed
Ministry of Finance Ministry of Public
Administration
FIMA
Nov.2006 draft sent in government procedure
?
Jan.2007 draft has been withdrawn
May 2007 draft sent in government procedure
9Structure of FIMA
10Novelties introduced by FIMA
- Type of investment firm determined by authorised
capital - Defining Small Investment Firm
- Systematic internalisers
- Borrowing/lending customers financial
instruments/ funds - Outsourcing
- Tied Agent
11Types of Investment firms
- The scope of services listed in the Article 8
of FIMA that an investment firm can perform is
determined by its amount of the authorised
capital - Min. value of authorised capital 730.000 EUR
- Investment firm can perform all services and
activities listed in Article 8 of FIMA. - 2. Min. value of authorised capital 125.000 EUR
- Investment firm can provide all services and
activities, except - dealing on its own account
- underwriting of financial instruments and/or
placing of financial instruments on a firm
commitment basis.
12Types of Investment firms - continuation
-
- 3. Min. value of authorised capital 50.000 EUR
- Investment firm can provide all services and
activities, except - dealing on its own account
- underwriting of financial instruments and/or
placing of financial instruments on a firm
commitment basis - safekeeping and administration of financial
instruments for the account of clients, including
custodianship and related services such as
cash/collateral management.
13Small Investment firm
- ... is an investment firm that can perform only
the following investment services and activities - transmission of orders in relation to
transferable securities or units of collective
investment undertakings to persons from Article
32. FIMA (providers of investment services and
activities) - investment advise
- And whose
- yearly income could not exceed 750.000 EUR.
14SIF special rules
- Provisions of FIMA do not apply to
- value of authorised capital
- performing services and activities outside the
territory of RS - obligation to disclose supervised information
- risk management
- rules of operations on performing investment
services and activities - system of guarantees with regard to investors
claims. - It can perform only investment advising and
trading of insurance products. - It should have protection of its liability for
damage in relation to its customers.
15MTF Systematic Internaliser
- MTF is a multilateral system, operated by an
investment firm or a market operator which brings
together multiple third party buying and selling
interests in financial instruments in the system
in a way that results in a contract in accordance
with special rules for MTF. - Systematic internaliser is an investment firm
which on an organised, frequent and systematic
basis deals on its own account by executing
client orders outside a regulated market or an
MTF.
16Borrowing/lending customers financial
instruments/funds
- Investment firm should not be allowed to use
customers financial instruments or funds, held by
them on behalf of a client, for their own account
or the account of another client of the firm,
unless - the client gives prior express consent to the use
of his/her instruments or funds on specified
terms, signed by the client - consensus could be general or particular for use
of clients instruments or funds in a single
transaction. - DUE CARE OF INVESTMENT FIRM WITH CUSTOMERS
ASSETS
17Outsourcing
- If investment firms outsource critical or
important operational functions or any investment
services or activities to a third party, they
have to adopt all reasonable measures to avoid
unnecessary additional operational risks. - It is not permitted that investment firms
outsource performing important operational
functions in the way that would make the quality
of internal control systems performing
impossible or extensively difficult as well as
that would make compliance with relevant law
difficult.
18Tied Agent
- ... is natural or legal person who under the
full and unconditional responsibility of only one
investment firm on whose behalf it acts - promotes investment and/or ancillary services to
clients or prospective clients - receives and transmits instructions or orders
from the client in respect of investment services
or financial instruments - sales financial instruments
- provides advice to clients or prospective clients
in respect of those financial instruments or
services.
19MiFIDs impact for the EU accessing countries
- Opportunity for domestic investment firms to act
cross national borders using single passport. - Competition between exchanges and other trading
platforms will significant reduce transaction
costs. - Lower costs and cross-border trading will
increase liquidity of domestic market. - Suggestion learn on experiences and mistakes of
EU Member States.
20TREM
- Investment firms which execute transactions in
any financial instruments admitted to trading on
a regulated market should report details of such
transactions to the competent authority as quick
as possible and no later than at the close of the
following working day. This obligation should be
applied whether or not such a transactions were
carried out on a regulated market. - The competent authority should establish the
necessary arrangements in order to ensure that
the competent authority of the most relevant
market in terms of liquidity for those financial
instruments also receives this information.
21Principles for transaction reporting
- Duties of investment firms
- Report transactions to home competent authority
ASAP - All transactions On the exchange off the
exchange - Special case Branches
- Duties of competent authorities
- Set up a national transaction reporting system
- Exchange TRs between certain competent
authorities - Principle Most relevant market in terms of
liquidity
22Deadlines for competent authorities
23Questions?