CESR says it is on target to release final Mifid guidance

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At the OpRisk & Compliance Mifid e-symposium, held on April 26, Diego Escanero, senior officer for investment firms at the Committee of European Securities Regulators (CESR), confirmed it was working towards issuing final guidance on best execution, passporting and home host issues and inducements under the Markets in Financial Instruments Directive (Mifid) by mid-May.

CESR is also in the process of finalising its recommendations for pre- and post-trade transparency, which should be available towards the end of May.

The European Commission has published clarification on three issues relating to best execution, as requested by CESR, which is currently assessing this response, and is expected to follow this up with advice on best execution in the form of a question and answer paper. “The consultation paper [on best execution] was very narrative and it was not clear how we would be able to extract recommendations, so we thought a good way to give guidance would be in a Q&A paper,” said Escanero during the OpRisk & Compliance Mifid e-symposium.

Resolving the home host issue threatens to be more complex. CESR sent a letter to the European Commission in November 2006 for clarification on this issue, but has not yet received a response. CESR has therefore decided to press ahead and issue guidance during May.

Meanwhile, financial services industry leaders have been urging CESR to draw up a list of reportable instruments under Mifid to help firms comply with their obligations. CESR has refused, however, saying that stock exchanges are the only organisations that could provide the banks with a full list of reportable instruments.

Michael McKee, director of wholesale and regulation at the British Bankers’ Association, has commented that it is virtually impossible for banks to establish the full list of shares, bonds and derivatives traded in 27 EU member states, and that new types of derivatives and innovative financial products are constantly being introduced. A centrally produced list would be beneficial to firms, says the BBA, but it seems CESR is not forthcoming on this issue. Banks should begin pressing the exchanges for a list, although it might come at a cost.

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