Introduction
to MiFID
Business Impact Compliance:
To comply with MiFID, firms will have to alter
their marketing practices, review customer contracts
and assess client needs more carefully. Many firms
will also need to ensure best execution and those
that trade securities outside regulated markets
will need to set up internal systems providing
continuous quotes. MiFID will allow firms to complete
transactions internally instead of going through
an exchange - a new market concept for many European
countries if not for the UK.
Market
Players: MiFID impacts a wide variety of
businesses including securities and futures firms
(asset managers, investment banks, brokerages,
private banking, hedge funds etc.), retail banks
and insurance firms conducting securities business,
Multi-lateral Trading Facilities (including ATSs
and ECNs), and regulated markets and investment
exchanges. Some organisations, such as sell-side
firms, may be significantly impacted by many,
if not all, MiFID provisions. Others, such as
buy-side firms, may be subject to only Conduct
of Business provisions. Firms in certain regulatory
jurisdictions may already be close to complying
with certain elements of the directive (for example,
transaction reporting or best execution) whereas
firms in others may not. Therefore, the effort
to comply with the requirements of MiFID for each
type of firm and financial marketplace will vary.
Business
Functions: Virtually all areas of the business
are affected including compliance, trading, portfolio
strategy, research, custody, finance, marketing,
human resources and legal. However, most signficant
impact will be across sales, client management
and operational activities.
Products
and Services: Similarly, the scope of financial
instruments covered by MiFID is broad including
equities, bonds, energy, derivatives and money
markets, although for certain MiFID provisions,
some assets classes will lead others. Additionally,
cultural and taxation barriers are likely to impact
the degree and speed of change among associated
financial products and services.
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