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Industry needs to keep the pressure on in order to meet MiFID deadline Back  
While most financial institutions are making headway with their preparations for MiFID, senior industry figures say that there is a lot more to do between now and the deadline.
Irish financial services institutions are on course to meet the deadline for the implementation of the Markets in Financial Instruments Directive (MiFID) next year, but can’t afford to take the foot of the gas before the completion date, according to senior figures from the Irish financial services sector.

Brian Healy, director of the Irish Stock Exchange, said that a ‘sense of urgency and a keenness of application’ is necessary in order to meet the November 2007 deadline for the directive.

MiFID, previously known as the ‘Investment Services Directive II’, is one of the central pillars of the Financial Services Action Plan and was adopted by the Council of Ministers in April 2004. It will replace the existing Investment Services Directive 93/22/EC.

The new Directive is designed to protect investors and safeguard market integrity by establishing harmonised requirements governing the activities of authorised intermediaries and to promote fair, transparent, efficient and integrated markets. It will allow investment firms, banks and exchanges to provide services across borders on the basis of home country authorisation, while bringing national rules closer together with the ultimate aim of creating a single European securities rule book.

As MiFID requirements extend from conduct of business rules right back to organisational requirements, the level of preparation required for impacted entities is high, according to Eimer O’Rourke, head of member service for retail banking at the Irish Banking Federation.

Martin Purdy, head of the compliance department at Bank of Ireland said that preparing for MiFID involves the same process as preparing for any other new legislation. He said, ‘The normal process is to start by identifying the footprint of the new legislation on your business, and MiFID is no different in this regard: it’s just bigger. Once firms identify the impact clearly, planning becomes more manageable’.

According to O’Rourke, the industry has been tracking MiFID since its inception as ISD II. She said that a range of measures are in place to help the implementation process run smoothly. ‘The Irish Banking Federation chairs a MiFID Working Group for its members, and has been involved in hosting a series of briefings and seminars on MifID,’ she explained.

Healy said that the financial services industry is ‘fully engaged’ with the task at hand, with many having established MiFID project groups to oversee the implementation process. He welcomed the arrival of a national MiFID forum, which he feels has given structure and guidance at a national umbrella level.

However despite the measures in place, implementing MiFID will still take a lot of work. ‘It is an unusually large and complex piece of legislation. Simply keeping track of all the strands of work is a major task in its own right. In addition, the CESR consultation process is ongoing, so there will be an ongoing risk of impacts on plans while that continues,’ said Purdy.

In an interview published on page 52 of this issue, Con Horan, head of prudential supervision at the Financial Regulator, expressed concern that firms weren’t adequately prepared for the Directive.

While most financial institutions will be familiar with the requirements specified in the Level 1 Directive and Level II Directive, the challenge now is to finalise the interpretations, said O’Rourke. She added that this was necessary ‘in order to effect the necessary operational, systems and training changes’.

Healy said that financial institutions need to factor in the time lag involved with implementation of MiFID. He said that firms needed to allow times for making the relevant changes to their IT systems and also to retrain staff.
See also page 52.

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