MiFID Implementation: Client Categorisation Requirements - FSA Paper

In this paper we focus, in particular, on those areas that we understand to be of greatest interest to the industry, for example, because they are relevant to planning decisions.

Firms need time to consider the impact of new legislation and effect changes to their existing processes and systems advance of the commencement of new rules.

In paragraphs 2.36 – 2.50, we also set out our current thinking on client classification for investment business which is outside the scope of MiFID (e.g. under Article 3) or where the business is not a MiFID service or activity.

This paper is not a consultation document; there are no proposed rules or guidance. We will formally consult on our proposed rules in the Reforming COB Regulation Consultation Paper (the COB CP) due to be published in October 2006.

This paper sets out our current views on:

• MiFID’s client categorisation provisions, supported by supplementary FAQs (Chapter 2 and Annex A);
• MiFID’s transitional provisions which grandfather certain clients (Chapter 3);
• MiFID’s definition of client, investment services and investment activities (Chapter 4);
• Article 20 of MiFID and retention of existing COB provisions - COB 2.3 (Reliance on others) and COB 4.1.5R (Agent as client) (Chapter 5); and
• possible impacts on other parts of the existing regulatory framework (Chapter 6).