FSA Urges Firms To Begin Planning For MiFID

The FSA is encouraging 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 has today published 'Planning for MiFID', a factual document which provides 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, said:

"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 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. As with all FSA consultations, this will include an analysis of the cost and benefits of implementation for UK financial services companies.

The IRO is designed to help firms identify measures that will affect them and start planning accordingly. For measures already in train, it encourages them to put forward their views at an earlier stage when they have the best chance of influencing policy formation.

Background

1. Planning for MiFID highlights the key areas which will be affected by the introduction of MiFID and the likely main practical implications for UK-regulated financial services firms.

2. The International Regulatory Outlook offers extensive analysis of the regulatory change being driven by international initiatives, including European Union legislation. It is intended to help stakeholders plan for forthcoming regulatory change.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the appropriate degree of protection for consumers; and fighting financial crime.

4. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.