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Experiences during the Implementation of the MiFID in Austria

Experiences during the Implementation of the MiFID in Austria. Andrea Kuras-Eder Split, 14 June 2007. - 1 -. Timetable (draft of 28.3.2007) Implementation of MiFID via Federal Act Securities Supervision Act 2007 and

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Experiences during the Implementation of the MiFID in Austria

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  1. Experiences during the Implementation of the MiFID in Austria Andrea Kuras-Eder Split, 14 June 2007 - 1 -

  2. Timetable (draft of 28.3.2007) • 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

  3. 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

  4. 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

  5. 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

  6. 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goal of a harmonised legal framework for investment services • References of „old“ Securities Supervision Act have been replaced by explicit rules • Limited power for FMA to issue regulations • No gold plating

  7. Main Areas of Regulation • Investment firms • Rules of Conduct • Best execution • MTF‘s • Transparency requirements

  8. 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

  9. 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

  10. Investment Firms – Austria /1 Definition (draft of 28.3.2007) • 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

  11. Investment Firms – Austria /2 Requirements (draft of 28.3.2007) Starting capital • € 50.000 investment advice and/or reception and transmission of orders • € 125.000 portfolio management • € 730.000 operation of an MTF Important: • Investment firms are at no time debtor to the client!

  12. Investment service providers (draft of 28.3.2007) • Only investment advice and reception and transmission of orders • Annual sales revenues do not exceed € 730.000 • No starting capital, if firm is insured under a professional liablity insurance policy • Are not investment firms

  13. 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

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