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MiFID – Questions and Answers

  1. What are the reasons behind the new regulations?

    2. It was felt that the existing regulatory regime governing financial services was obstructing the development of a harmonised pan-European market. In order to facilitate this development, fundamental parts of the current regulatory regime have required re-drafting. The new legislation should create a level playing field regarding regulation across Europe.

  2. Which European countries are implementing MiFID?

    3. All EEA states are in the process of implementing MiFID. The implementation date for all states is 1st November 2007, although it is unlikely that all of them will meet that target.

  3. When does MiFID come into force?

    4. MiFID will be implemented on1st November 2007 in the UK. All of the necessary legislation is in place, with the FSA due to finalise the revised rulebooks in October 2007. Much of those rulebooks have already been made public in the various policy statements which the FSA have been publishing since the beginning of the year.

  4. How will MiFID impact on the relationship between Aberdeen Asset Management and its’ clients?

    5. The impact should be minimal, but there are several areas to clarify.

    1. New Client Categorisation

      2. Under MiFID, clients will be categorised as retail, professional or eligible counterparties (ECPs). This will dictate the level of protection afforded to the client under the new regulatory regime. Aberdeen Asset Management does not intend to categorise any clients as ECPs. Rather, all clients should fall within the retail or professional categories, affording greater protections such as best execution.

    2. Best Execution

      3. Aberdeen Asset Management have put into place an order execution policy, which means that we are obliged to take all reasonable steps to obtain the best possible result for you when executing your orders. In line with the new regulations, Aberdeen Asset Management will monitor and review this policy, and the execution venues on a regular basis, at least annually. We do require consent to this policy, and will have sent you a consent form for signature and return. This consent form has two parts – consent to our order execution policy and consent to orders being executed outside either a regulated market or Multi-Lateral Trading Facility (MTF). If you have not received this form, please contact your client relationship manager as a matter of urgency. If we have not received signed consent from you by 1st November 2007, executing orders for you would constitute a breach of the new regulations.

      The order execution policy is available here.

    3. Conflicts of Interest

      4. Under MiFID, the requirements for the management of conflicts of interest have changed. Disclosure of conflicts is no longer a safe harbour, and should only be the last resort, if the conflicts of interest policy is unable to manage the situation. The Aberdeen Asset Management conflicts of interest policy is available here. This details how Aberdeen Asset Management will manage conflicts. If you have any further questions, please contact your client relationship manager.