FSA Urges Firms To Prepare For MiFID Introduction

by Robin Pilgrim, LawAndTax-News.com, London

23 November 2005

In a statement released on Monday, the UK's Financial Services Authority sought to encourage 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 1 November 2007.

The Directive will have a significant impact on financial services regulation and how firms operate and interact with customers.

The FSA this week published 'Planning for MiFID', 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 analyses regulatory change that is being driven by European and other international initiatives and its likely effects on UK financial services.

Hector Sants, FSA Managing Director for Wholesale Business, announced that:

"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 stated that it cannot be certain at this stage about the final detail of the legislative requirements. HM Treasury and the FSA will consult on the UK implementation of the Directive, when the final details are published, during 2006.

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