The UK’s financial regulator, the Financial Services Authority has urged senior managers of regulated firms to start preparing for the imple...

The UK’s financial regulator, the Financial Services Authority has urged senior managers of regulated firms to start preparing for the implementation of the European Union’s Markets in Financial Instruments Directive (MiFID).

The directive is scheduled for a 1 November 2007 start and will have a significant impact on financial services regulation and how firms operate and interact with customers.

Its implementation was extended by six months from the previously agreed upon April 2007 following an appeal during the recent UK presidency of the EU.

To help firms prepare, the FSA has published a guidance note "Planning for MiFID", which highlights the key areas which will be affected by the directive and the main practical implications for regulated firms.

The guide reiterates that responsibility is with senior management to come to grips with the challenges their firm will face and to take the requisite action.

The guide stresses that organisational structure, governance oversights, policies and procedures, and trading and infrastructure will be affected by MiFID, along with many other functions in regulated firms. This should prompt senior managers to make a thorough review of the functions to help identify the business issues their firms need to address according to the FSA.

MiFID will contain conduct of business requirements which could affect client classification, marketing, information about the firm and its services, client agreements, suitability and know your customer, appropriateness and execution-only services, best execution, client order handling, and reporting information to clients.