Andrea Kuras-Eder Split, 14 June Experiences during the Implementation of the MiFID in Austria

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Timetable (draft of ) Implementation of MiFID via Federal Act Securities Supervision Act 2007 and Revision of Banking Act, Stock Exchange Act, Investment Fund Act, Capital Market Act, Financial Market Authority Act and Consumer Protection Act Draft was consulted until 25 April 2007 Parliamentary treatment planned for June/July 2007 Should come into force on 1 November 2007

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Impact /1 Austria as an economic location Overall positiv Harmonised requirements facilitate investment decisions higher level of invester protection Organisational requirements for investment firms foster stability

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Impact /2 Market participants Higher costs for investment firms capital requirements (operational risks) new IT systems additional personal Stimulating effect as cross border services are facilitated Strong market position in neighbouring countries is enhanced

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Principles Harmonisation of investment services Securities Supervision Act takes account of complex investment services and instruments Higher level of protection for investors rules of conduct, best execution Integrity of financial system – new trading platforms included Harmonised legal framework for the execution of orders via exchanges, MTF‘s and investment firms

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Implementation Technique System and terminology of Directive have been followed as far as the Austrian constitution permits Government supports European goal of a harmonised legal framework for investment services References of „old“ Securities Supervision Act have been replaced by explicit rules Limited power for FMA to issue regulations No gold plating

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Main Areas of Regulation Investment firms Rules of Conduct Best execution MTF‘s Transparency requirements

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Investment Firms – MiFID /1 Definition Art 4, para 1, lit 1: „ Investment firm“ means any legal person whose regular occupation or business is the provision of investment services to third parties and/or the performance of investment activities on a professional basis Member States may include in the definition of investment firms undertakings which are not legal persons, provided that a) their legal status ensures a level of protection for third parties‘ interests and b) they are subject to equivalent prudential supervision appropriate to their legal form

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Investment Firms – MiFID /2 Optional Exemption Art 3: Member States may choose not to apply this Directive to any persons that are not allowed to hold clients‘ funds or securities and which for that reason are not allowed at any time to place themselves in debt with their client and are not allowed to provide any investment service except the reception and transmission of orders and the provision of investment advice

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Investment Firms – Austria /1 Definition (draft of ) Art 3, para 1: „Investment firm“ shall be a legal person who is entitled to provide investment services and investment activities The provision of the following investment services require a license from the FMA: investment advice portfolio management reception and transmission of orders operation of an MTF Austrian credit institutions and investment firms are entitled to perform financial analysis

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Investment Firms – Austria /2 Requirements (draft of ) Starting capital € investment advice and/or reception and transmission of orders € portfolio management € operation of an MTF Important: Investment firms are at no time debtor to the client!

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Investment service providers (draft of ) Only investment advice and reception and transmission of orders Annual sales revenues do not exceed € No starting capital, if firm is insured under a professional liablity insurance policy Are not investment firms

Andrea Kuras-Eder Split, 14 June 2007 Experiences during the Implementation of the MiFID in Austria Communication with Market Participants 3 joint meetings of FMA, Ministry of Finance and Chamber of Commerce (February to April 2007) 3-4 meetings of FMA and Chamber of Commerce on regulations (May to June 2007) Constant informal contacts