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MiFID – GENERAL PRESEN T ATION (practical example of Lamfalussy process ). Conference on Implementation o f Markets in Financial Instruments Directive (MiFID) Split – 14 June 2007. J a n Š o v a r Ministry of Finance, Czech republic.

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mifid general presen t ation practical example of lamfalussy process

MiFID – GENERAL PRESENTATION (practical example of Lamfalussy process)

Conference on Implementation of Markets in Financial Instruments Directive (MiFID) Split – 14 June 2007

J a n Š o v a r

Ministry of Finance, Czech republic

The Ministry of Finance of the Czech Republic, as a matter of policy, disclaims responsibility for any private publication or statements by any of its employees.

The views expressed herein are those of the author and do not necessarily reflect the views of the Ministry or of the author’s colleagues on the staff of the Ministry.


Jan Šovar

financial integration legislative developments
In June 1998, the European Council invited the European Commission to prepare a framework for action to develop the Single Market in financial services. In May 1999, the Commission published the Financial Services Action Plan (2000-2005), which was endorsed by the Lisbon European Council in March 2000.

The FSAP consisted of a set of 42 measures intended to improve the Single Market in financial services by filling gaps and removing remaining barriers to provide a legal and regulatory environment that supports the integration of financial markets across the EU.

Financial integration – legislative developments

Jan Šovar

lamfalussy process
The Committee of Wise Men, chaired by Baron Alexandre Lamfalussy, outlined in its report of 15 February 2001 several shortcomings in the legislative system for securities.

The report proposed a four level approach with regard to the legislative process in order to solve these problems.

Lamfalussy process

Jan Šovar

transposition of lamfalussy directives
The Directives – adopted on the basis of the so-called "Lamfalussy approach" – fall into two categories: "level 1 Directives", which set out framework principles and "level 2 Directives", which set out the implementing measures that allow these principles to be put into practice.

There are four "level 1 Directives

Markets in Financial Instruments Directive (MiFID)

Market Abuse Directive (MAD)

Prospectus Directive (PD)

Transparency Directive (TD)

All four are crucial pieces of EU legislation on securities and investment business.

Transposition of Lamfalussy Directives

Jan Šovar

what is mifid
The Directive 2004/39/EC on Markets in Financial Instruments (MiFID) was adopted by the European Parliament and Council on 21 April 2004 (OJ L145/1 of 30 April 2004).

It will replace the Investment Services Directive 93/22/EEC.

Extends the coverage of the current ISD regime

Introduces new and more extensive requirements to which firms will have to adapt

What is MiFID?

Jan Šovar

implementing measures l2
The Level 2 implementing measures were adopted 10 August 2006. These comprise one implementing directive and one implementing regulation:

Commission Directive 2006/73/EC of 10 August 2006, on organisational requirements and operating conditions for investment firms (ID) and

Commission Regulation (EC) 1287/2006 of 10 August 2006, on record-keeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading (IR).

The MiFID and the Level 2 Directive are due to be transposed into the national laws of Member States by January 2007 and apply by November 2007. The Level 2 Regulation will be directly applicable, at the same time.

Implementing measures (L2)

Jan Šovar

2004/39/EC (MiFID)

2006/73/EC (ID)

1287/2006 (IR)


CESR is shortly to publish guidance on BE, inducements, passport and transaction reporting


Launching infringements for late or faulty transposition

Scrutinising Art.4 notifications, and esp. justifications


The role of CESR at Level 3 under the Lamfalussy Process, Ref.: CESR/04-527b


Jan Šovar

key cross cutting issues
Timing of transposition – 31/Jan/2007, Timing of implementation – 1/Nov/2007

Maximum/minimum harmonization


Linkage to existing IOSCO and CESR standards

Cross sectoral co-ordination (CESR, CEBS and CEIOPS)

Key cross-cutting issues

Jan Šovar

mifid transposition questionnaire results summary
Source: http://ec.europa.eu/internal_market/securities/docs/isd/implementation/mifid_transposition_timeline_en.pdfMiFID Transposition questionnaire results summary

Jan Šovar

what significant changes does mifid make
What significant changes does MiFID make?
  • Range is wider
  • A deeper degree of harmonization
  • Cross border business
  • Capital adequacy directive,
  • Banking consolidation directive

Jan Šovar

which firms will be affected
In general, MiFID will cover most, if not all, firms currently subject to the ISD + some that currently are not and in some areas, the position for firms will be less clear-cut

Future and option firms

Some commodities firms

Stock brokers and broker dealers

Banks adn building societies

Firms competing for the same type of business ≠ subject to same regulatory standards

Which firms will be affected?

Jan Šovar

lamfalussy legue
Source: http://ec.europa.eu/internal_market/securities/docs/transposition/table_en.pdfLamfalussy Legue

Jan Šovar

a new strategic approach
With the completion of the FSAP, the future approach to the integration of financial services in Europe was being discussed. Many other Member States and industry practitioners firmly have believed that a second raft of new legislation – or a FSAP “Mark II” – is neither required nor desirable.

Instead, new EU legislation should be considered on a selective basis, and only where absolutely necessary.

Green Paper (03/2005)

White Paper (12/2005) – EU financial service policy for the next five years

A new strategic approach

Jan Šovar

more information
DG Markt MiFID website


FAQ on MiFID – http://tinyurl.com/ypcc6s

Background notes to the MiFID – IR and ID http://tinyurl.com/hsqx6 and http://tinyurl.com/ywx6qj

MiFID Transposition State of Play

Legal texts, historical info, other links

CESR website


Expert Group – MiFID Level 3

More information

Jan Šovar

thank you for your attention
Thank you for your attention !

jan.sovar@mfcr.cz orjan.sovar@yahoo.co.uk

Jan Šovar