1. The Post-MiFID Financial World László Seregdi June 15, 2007 Split

2. June 15, 20072 Agenda 1.Introduction of HFSA 2.Main effects of MiFID 3.Issues for integrated supervisors 4.Questions 5.Conclusions

3. June 15, 20073 Introduction of HFSA Government agency, separately from NBH Integrated supervision Financed by the industry Institution and market supervision Nearly 2000 institutions + individuals Staff: 500 Supervisory Council MiFID implementation in Hungary

4. June 15, 20074 Main effects of MiFID 1.Capital requirement + rules of internal procedures - this is a guiding principle also in banking and insurance sector - stronger internal regulation of service providers - more proactive, risk based supervision

5. June 15, 20075 Main effects of MiFID 2. Focused on client - best execution (Elements of best execution (price, speed, type of transaction etc.), best execution policy, monitoring and review, new risk for service providers - client classification (suitability and appropriateness test) - transparency: need for a better financial culture and education

6. June 15, 20076 Main effects of MiFID 3. Need for a new supervisory approach - Close connection (not only through examinations, information sharing) - Guidelines, transparent supervisory work - Examination of outsourced activity - Hungary: MiFID Panel, 6 meetings, consultations, problems, documents on internet, transaction reporting system

7. June 15, 20077 Issues for integrated supervisors 1.Main principles can be used also in banking and insurance sector (best execution, transparency etc.) 2.Need for further harmonization: outsourcing, compliance officer, client classification, agents

8. June 15, 20078 Common elements of MiFID and CRD Requirements for managers Internal governance and risk management Proportionality Supervisory tools Transparency (institutions and supervisors) Co-operation between supervisory authorities Internalization- pricing

9. June 15, 20079 Questions 1.Future role of MTFs and exchanges 2.Internalization (cost-benefit) 3.Single passport (how to collect data on activity) 4.Effect on EU competitiveness (strong regulation vs. higher administrative cost)

10. June 15, 200710 Tasks of the institutions Internal procedures, regulations Compliance function Decision on internalization Decision on MTF IT developments Client categorization Best execution principle Outsourcing

11. June 15, 200711 Tasks of the supervisors Creating legislative background, discussions Guidelines and recommendations Licensing Information sharing with other supervisors List of market instruments List of liquid shares List of systematic internalizers

12. June 15, 200712 Conclusions Preparation is time-consuming Close co-operation between supervisors and market participants Long list of practical questions Common principles in other financial sectors