Bovill - the UK financial services regulatory consultancy - runs regular briefings. These are the slides from the February 2015 briefing on MiFID II. For more information visit www.bovill.com. Further information on the event is below: With the ‘Level Two’ advice published just before Christmas, this is the first of our 2015 series of MiFID II briefings. This session focuses on the investor protection elements of ESMA's advice including topics such as: • product governance to product intervention • client assets • remuneration • conflicts and inducements (dealing commission) • best execution and client order handling • information to clients. The briefing gives more details of our MiFID II toolkit and how this could help your project.

1. MiFID II Level 2
Investor protection matters
Bovill Briefing
February 2015
Fiona Richardson and Mark Spiers/Rebecca Thorpe

2. 2
Christmas came early!
19 December 2014

3. Making markets more robust
3
MiFID II aims to:
 make financial markets more robust and
efficient
 take account of technological developments
since MiFID I
 increase transparency of both equity and
non-equity markets
 introduce a stricter framework for commodity
derivatives markets
 reinforce supervisory powers
 strengthen investor protection.

4. Understanding the levels of detail
4
Level 1 – Framework Legislation
• Delegated and Implementing Acts
Level 2 – Implementing Measures
• Implementing Technical Standards and Regulatory Technical Standards
Level 2.5 – Technical Standards
• ESMA issue non-binding guidance on the meaning of the Levels 1 and 2
• National regulators comply or explain
Level 3 – Regulatory convergence
• Enforcement action by EC for failure to implement or inconsistent implementation
Level 4 – Enforcement of Directive
Recast
MiFID
MiFIR
MiFID
II

5. MiFID II timeline
5
2014 2015 2016 2017
Legislation
ESMA Level Two
Advice to EC
[19/12/14]
Level One entry
into force
[02/07/14]
Level Two
Published in OJ
[Due 03/01/16]
MiFID II applies
[03/01/17]
RTS to EC
[Due 03/07/15]
National
Transposition
[Due 03/07/16]
ITS to EC
[Due 03/01/16]
You are
Here

6. What is in MiFID II?
6
MiFID (Directive)
Scope – Exemptions and Definitions
Authorisation
Corporate Governance
Conflicts of Interest
Inducements and Commissions
Client Categorisation
Product Governance
Best Execution
Algorithmic Trading
Passporting
Third Country Firms – Branch
MiFIR (Regulation)
Third Country Firms – Cross Border
Pre and Post Trade Transparency
Trading Obligations
Consolidated Tape
Transaction Reporting
Product Intervention

7. Telephone
recording
Information
to clients
Reporting
Client
Agreements
AppropriatenessSuitability
Fair, Clear and
not MisleadingRemuneration
ConflictsProduct
Governance
Record
Keeping
Complaints
Advice
Client
Assets
The investor protection hopper
7
Compliance
Inducements
Strengthened investor protection
Underwriting
and Placing
ECPs Best
Execution
Client Order
Handling
Product
Intervention

8. Key themes
8
Retail standards
being applied to
Professional clients
Board sign off
Senior Management
oversight
Role of Compliance
Disclosure

9. Planning ahead
9
“Firms will need to start planning for
the changes ahead of the finalisation
of the EU implementing legislation and
the subsequent changes we make to
our Handbook and the Treasury
makes to financial services legislation”
Financial Conduct Authority website

10. “The devil is in the detail”
MiFID I lessons:
• Senior management responsibility
• Proper project governance
• Gaps must be owned by the business
not compliance
• Robust tracking of compliance
• Expect questions from clients and
regulators
Learning from MiFID I
10

11. • What rules apply to my business?
• Have they changed from MIFID I?
• If so do I need to take action?
• If I do need to take action what exactly do I need to do,
and what is the effort needed?
• Who do I need to engage with, when and how?
Rule triage
11

12. Engaging the whole firm
12

13. There is a lot of content in MiFID II
Don’t wait for FCA rules or even the final EU legislation
START PLANNING FOR MiFID II NOW!
Have you started yet?
13
• read
• ascertain gaps
• develop
solutions
• identify
opportunities
Analysis
and
planning
• change
• test
• train
• client contact
Implement
Yourproject

14. Questions?
14