MiFID – GENERAL
PRESENTATION
(practical example of
Lamfalussy process)
Conference on Implementation of
Markets in Financial Instruments
Directive (MiFID)
Split – 14 June 2007
Jan Šovar
Ministry of Finance, Czech republic
DISCLAIMER
The Ministry of Finance of the Czech
Republic, as a matter of policy, disclaims
responsibility for any private publication or
statements by any of its employees.
The views expressed herein are those of
the author and do not necessarily reflect
the views of the Ministry or of the author’s
colleagues on the staff of the Ministry.
Jan Šovar
2
Financial integration –
legislative developments


In June 1998, the European Council invited the
European Commission to prepare a framework for
action to develop the Single Market in financial
services. In May 1999, the Commission published
the Financial Services Action Plan (2000-2005),
which was endorsed by the Lisbon European
Council in March 2000.
The FSAP consisted of a set of 42 measures
intended to improve the Single Market in financial
services by filling gaps and removing remaining
barriers to provide a legal and regulatory
environment that supports
the integration of3
Jan Šovar
Lamfalussy process


The Committee of Wise Men, chaired by
Baron Alexandre Lamfalussy, outlined in its
report of 15 February 2001 several
shortcomings in the legislative system for
securities.
The report proposed a four level approach
with regard to the legislative process in order
to solve these problems.
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4
Transposition of Lamfalussy
Directives

The Directives – adopted on the basis of the so-called
"Lamfalussy approach" – fall into two categories: "level 1
Directives", which set out framework principles and
"level 2 Directives", which set out the implementing
measures that allow these principles to be put into
practice.

There are four "level 1 Directives
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Markets in Financial Instruments Directive (MiFID)
Market Abuse Directive (MAD)
Prospectus Directive (PD)
Transparency Directive (TD)
All four are crucial pieces of EU legislation on
securities and investment business.
Jan Šovar
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What is MiFID?


The Directive 2004/39/EC on Markets in
Financial Instruments (MiFID) was adopted
by the European Parliament and Council on
21 April 2004 (OJ L145/1 of 30 April 2004).
It will replace the Investment Services
Directive 93/22/EEC.


Extends the coverage of the current ISD regime
Introduces
new
and
more
extensive
requirements to which firms will have to adapt
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Implementing measures (L2)

The Level 2 implementing measures were adopted
10 August 2006. These comprise one implementing
directive and one implementing regulation:



Commission Directive 2006/73/EC of 10 August 2006, on
organisational requirements and operating conditions for
investment firms (ID) and
Commission Regulation (EC) 1287/2006 of 10 August 2006,
on record-keeping obligations for investment firms,
transaction reporting, market transparency, admission of
financial instruments to trading (IR).
The MiFID and the Level 2 Directive are due to be
transposed into the national laws of Member States
by January 2007 and apply by November 2007. The
Level 2 Regulation will be directly applicable, at the
same time.
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
2004/39/EC (MiFID)


2006/73/EC (ID)
1287/2006 (IR)

CESR


CESR is shortly to publish
guidance on BE,
inducements, passport and
transaction reporting
COM


Launching infringements
for late or faulty
transposition
Scrutinising Art.4
notifications, and esp.
justifications
Source:
The role of CESR at Level 3 under the
Lamfalussy Process,
Ref.: CESR/04-527b
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Key cross-cutting issues
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Timing of transposition – 31/Jan/2007,
Timing of implementation – 1/Nov/2007
Maximum/minimum harmonization
Directive/regulation
Linkage to existing IOSCO and CESR
standards
Cross sectoral co-ordination (CESR,
CEBS and CEIOPS)
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MiFID Transposition
questionnaire results
summary
Source:
http://ec.europa.eu/internal_market/securities/docs/is
d/implementation/mifid_transposition_timeline_en.pd
f
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What significant changes does
MiFID make?
•
Range is wider
•
A deeper degree of harmonization
•
Cross border business
•
Capital adequacy directive,
Banking consolidation directive
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Which firms will be affected?

In general, MiFID will cover most, if not all,
firms currently subject to the ISD + some
that currently are not and in some areas,
the position for firms will be less clear-cut
Future and option firms
 Some commodities firms
 Stock brokers and broker dealers
 Banks adn building societies


Firms competing for the same type of
business ≠ subject to same regulatory
standards
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Lamfalussy Legue
Source: http://ec.europa.eu/internal_market/securities/docs/transposition/table_en.pdf
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A new strategic approach
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With the completion of the FSAP, the future
approach to the integration of financial services
in Europe was being discussed. Many other
Member States and industry practitioners firmly
have believed that a second raft of new
legislation – or a FSAP “Mark II” – is neither
required nor desirable.
Instead, new EU legislation should be
considered on a selective basis, and only where
absolutely necessary.


Green Paper (03/2005)
White Paper (12/2005)Jan–Šovar
EU financial service policy
14
More information

DG Markt MiFID website

http://ec.europa.eu/internal_market/securities/isd/inde
x_en.htm
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FAQ on MiFID – http://tinyurl.com/ypcc6s
Background notes to the MiFID – IR and
http://tinyurl.com/hsqx6 and http://tinyurl.com/ywx6qj
MiFID Transposition State of Play
Legal texts, historical info, other links
ID
CESR website

http://www.cesr.eu/index.php?page=groups&mac=0id
=53

Expert Group – MiFID Level 3
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Thank you for your attention !
[email protected] or [email protected]
Jan Šovar
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