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The Post-MiFID Financial World

The Post-MiFID Financial World. László Seregdi June 15, 2007 Split. Agenda. Introduction of HFSA Main effects of MiFID Issues for integrated supervisors Questions Conclusions. Introduction of HFSA. Government agency, separately from NBH Integrated supervision Financed by the industry

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The Post-MiFID Financial World

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  1. The Post-MiFID Financial World László Seregdi June 15, 2007 Split

  2. Agenda • Introduction of HFSA • Main effects of MiFID • Issues for integrated supervisors • Questions • Conclusions

  3. Introduction of HFSA Government agency, separately from NBH Integrated supervision Financed by the industry Institution and market supervision Nearly 2000 institutions + individuals Staff: 500 Supervisory Council MiFID implementation in Hungary

  4. Main effects of MiFID • 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

  5. Main effects of MiFID 2. 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

  6. Main effects of MiFID 3. 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

  7. Issues for integrated supervisors • Main principles can be used also in banking and insurance sector (best execution, transparency etc.) • Need for further harmonization: outsourcing, compliance officer, client classification, agents

  8. Common elements of MiFID and CRD Requirements for managers Internal governance and risk management Proportionality Supervisory tools Transparency (institutions and supervisors) Co-operation between supervisory authorities Internalization- pricing

  9. Questions • Future role of MTFs and exchanges • Internalization (cost-benefit) • Single passport (how to collect data on activity) • Effect on EU competitiveness (strong regulation vs. higher administrative cost)

  10. Tasks of the institutions • Internal procedures, regulations • Compliance function • Decision on internalization • Decision on MTF • IT developments • Client categorization • Best execution principle • Outsourcing

  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

  12. Conclusions Preparation is time-consuming Close co-operation between supervisors and market participants Long list of practical questions Common principles in other financial sectors

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