1. 24 th January 2007Craigcrook Management Services1 COMPLIANCE OFFICERS’ WORKSHOP MiFID – Firms and Markets

2. 24 th January 2007Craigcrook Management Services2 MiFID Agenda Overview Areas Applicable: Passporting MTFs OTC Transaction Reporting

3. 24 th January 2007Craigcrook Management Services3 MiFID Agenda Conclusion Deliverables included in your packs

4. 24 th January 2007Craigcrook Management Services4 MiFID Overview Commencement – 1 st November 2007 EU/EEA wide market opportunities The clear cost of implementation of MiFID will only prove justified if firms take the opportunities generated to raise revenues. (John Tiner)

5. 24 th January 2007Craigcrook Management Services5 MiFID Overview Impact will vary between sectors Costs will vary depending on markets, instruments and complexity. Could be substantial if a Systematic Internaliser but also opportunities

6. 24 th January 2007Craigcrook Management Services6 MiFID Passporting Arrangements similar to the ISD Several activities upgraded to being directly passportable (see pack) Investment Advice now directly passportable MTFs can be passported

7. 24 th January 2007Craigcrook Management Services7 MiFID Passporting CFDs can now be directly passported MTFs MTFs can provide remote access screens Must notify the identity of its Members And location remote user screens

8. 24 th January 2007Craigcrook Management Services8 MiFID Passporting Establishing a Branch Similar to current procedure Changes to Branch information needs to be notified Prior to the changes taking place

9. 24 th January 2007Craigcrook Management Services9 MiFID - Branch Home Regulator SYSC Financial Resources Client Money Client Assets Conflicts of Interest Host Regulator Conduct of Business Transparency Transaction Reporting

10. 24 th January 2007Craigcrook Management Services10 MiFID Passporting ISD Passports will automatically become MiFID Passports

11. 24 th January 2007Craigcrook Management Services11 MiFID Multilateral Trading Facilities (“MTF”) Similar to current rules for ATFs Transparent Access required More detailed Pre Trade disclosures BUT, Waivers for certain types of trades

12. 24 th January 2007Craigcrook Management Services12 MiFID Multilateral Trading Facilities (“MTF”) Post trade transparency More rigid and detailed requirements Now similar to those for a Regulated Market

13. 24 th January 2007Craigcrook Management Services13 MiFID Over The Counter (“OTC”) Investment firms offering OTC products defined as an SI Systematic Internaliser definition: –Material Commercial role –Separate Staff –Available to clients on a regular basis

14. 24 th January 2007Craigcrook Management Services14 MiFID OTC OTC for wholesale market not a SI Advise FSA by 1 st December of SI services if in Shares Firm quotes only if for “Liquid Shares” Otherwise Quote on demand

15. 24 th January 2007Craigcrook Management Services15 MiFID OTC Deal at quote price for Retail Price improvement possible for Professionals Order value must be over €7,500 Possibility of batching retail client orders to achieve Price Improvement

16. 24 th January 2007Craigcrook Management Services16 MiFID Transaction Reporting SUP 17 enshrines the current arrangements Uniform Transaction Reporting across all sectors Transaction Reporting Users Pack being prepared by FSA

17. 24 th January 2007Craigcrook Management Services17 MiFID Transaction Reporting MiFID Transaction Reporting requirements Only applies to any financial instrument traded on a Regulated Exchange Now includes Commodity Derivatives, Interest Rate Derivatives and Foreign Exchange Derivatives

18. 24 th January 2007Craigcrook Management Services18 MiFID Transaction Reporting Making a Report –Directly by the firm or a third party acting on its behalf –By a trade matching or approved reporting system –Via a Regulated Market or MTF

19. 24 th January 2007Craigcrook Management Services19 MiFID Transaction Reporting 23 fields to be completed Little impact on Securities and Futures firms More impact on Investment Managers and PIA firms Derivatives should quote underlying Securities code

20. 24 th January 2007Craigcrook Management Services20 MiFID Transaction Reporting Firms must identify where an MTF has been used and which one To whom to report:

21. 24 th January 2007Craigcrook Management Services21 MiFID UK FSA Other EEA States Local Regulator (not FSA as at present)

22. 24 th January 2007Craigcrook Management Services22 MiFID Non MiFID Transaction Reporting requirements Transaction Reporting extended to: All OTC instruments based on equity or debt instruments; and Transactions on all “Prescribed Markets” such as AIM and OFEX

23. 24 th January 2007Craigcrook Management Services23 MiFID Transaction Reporting Firm Capacity Principal or Agency reported currently Will change to: Proprietary; Principal for Client facilitation; Agency

24. 24 th January 2007Craigcrook Management Services24 MiFID Conclusion Work is now urgent Impact for your firm needs to assessed Gap Analysis Budget the costs Drive forward via Project Team

25. 24 th January 2007Craigcrook Management Services25 MiFID William Macdonald Managing Director Craigcrook Management Services 198 Craigcrook Road, Edinburgh Tel:0131-312-7501Mobile:07889-534743 Email: william.macdonald@craigcrookms.co.uk