the post-mifid financial world lászló seregdi june 15, 2007 split
TRANSCRIPT
The Post-MiFID Financial World
László SeregdiJune 15, 2007
Split
June 15, 2007 2
Agenda
1. Introduction of HFSA2. Main effects of MiFID3. Issues for integrated
supervisors4. Questions5. Conclusions
June 15, 2007 3
Introduction of HFSAGovernment agency, separately from
NBHIntegrated supervisionFinanced by the industry Institution and market supervisionNearly 2000 institutions + individualsStaff: 500Supervisory CouncilMiFID implementation in Hungary
June 15, 2007 4
Main effects of MiFID
1. Capital requirement + rules of internal procedures- this is a guiding principle also in banking and insurance sector- stronger internal regulation of service providers- more proactive, risk based supervision
June 15, 2007 5
Main effects of MiFID2. Focused on client
- best execution (Elements of best execution (price, speed, type of transaction etc.), best execution policy, monitoring and review, new risk for service providers- client classification (suitability and appropriateness test)- transparency: need for a better financial culture and education
June 15, 2007 6
Main effects of MiFID3. Need for a new supervisory approach
- Close connection (not only through examinations, information sharing)- Guidelines, transparent supervisory work- Examination of outsourced activity- Hungary: MiFID Panel, 6 meetings, consultations, problems, documents on internet, transaction reporting system
June 15, 2007 7
Issues for integrated supervisors
1. Main principles can be used also in banking and insurance sector (best execution, transparency etc.)
2. Need for further harmonization: outsourcing, compliance officer, client classification, agents
June 15, 2007 8
Common elements of MiFID and CRD
Requirements for managersInternal governance and risk
managementProportionalitySupervisory toolsTransparency (institutions and
supervisors)Co-operation between supervisory
authorities
Internalization- pricing
June 15, 2007 9
Questions
1. Future role of MTFs and exchanges
2. Internalization (cost-benefit)3. Single passport (how to collect
data on activity)4. Effect on EU competitiveness
(strong regulation vs. higher administrative cost)
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Tasks of the institutions• Internal procedures, regulations• Compliance function• Decision on internalization• Decision on MTF• IT developments• Client categorization• Best execution principle• Outsourcing
June 15, 2007 11
Tasks of the supervisors• Creating legislative background,
discussions• Guidelines and recommendations• Licensing• Information sharing with other
supervisors• List of market instruments• List of liquid shares• List of systematic internalizers
June 15, 2007 12
Conclusions
Preparation is time-consumingClose co-operation between
supervisors and market participants
Long list of practical questionsCommon principles in other
financial sectors