Markets in Financial Instruments Directive: implementation

MiFID will allow investment firms, banks and exchanges to provide their services across borders on the basis of their home country authorisation, and will change the conduct of business rules applicable to financial institutions. It is due to be implemented in the UK by 30th April 2007.

The Directive is likely to have a major impact on current market and trading practice as well as upon the way in which the financial service sector is regulated. It will also require firms to introduce a whole series of changes to their systems, documentation and order-handling procedures.

Industry groups the Association of Private Client Investment Managers and Stockbrokers (APCIMS), the British Bankers' Association (BBA), the Futures and Options Association (FOA) and the International Capital Market Association (ICMA) are therefore concerned that the implementation be carried out in a practical and cost efficient way. They are also keen to avoid high levels of legal uncertainty and regulatory risk.

The Associations have therefore launched a five-stage programme of work for establishing an industry approach towards implementing the Directive. This includes:

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

A steering committee is being set up to ensure that the work is as practical and market-sensitive as possible.