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MiFID: French banks are ready

The implementation of the Markets in Financial Instruments Directive (MiFID) on November 1, 2007, is set to completely revolutionise the banking and finance sectors : not only will it derail market activity by strongly increasing the level of competition between markets, but it will also modify the relationship between banks and their clients. By proposing a standardised framework for all financial instrument market activities, the new directive should allow for greater transparency and quality in investor services. However, it will also mean a furious competitive race for the financial marketplaces.

Concrete change from November 1

The application of the MiFID proved a major undertaking for French banks as it affects both investment and retail banking activities. In order to accommodate the new regulatory framework, banks have notably had to restructure their information systems, provide training for their branch staff and keep their clients duly informed.

Today, the country's banks are ready :

  • to offer their clients the benefit of new execution platforms which could be set up alongside traditional regulated markets*, as new European legislation allows for a level playing-field between all execution venues and facilitates the provision of investment services within the European Union;

  • to implement pre- and post-trade transparency obligations for equity markets, order execution conditions that are in the best interests of their clients and pre-trade and post-trade reporting data to their clients ;

  • to formalise rules of good conduct governing the commercialisation of financial instruments** and investor protection that are adapted to three new major client categories.

The MiFID formalises relations that are based upon a bank's knowledge of its customers in order to ensure the best fit between their needs and profile and the financial instruments and services it provides. The quality of service, particularly as regards information and advice, should therefore improve.

A key challenge for the Place de Paris

The fact that French banks are well prepared for the directive should bolster the appeal of the Paris marketplace, something which the country's government recognises as a key factor in the development of the national economy.

This unprecedented collective mobilisation, as reflected by the setting up of the Haut Comité de Place (High Commission), needs to go hand-in-hand with concrete measures to reinforce the competitiveness of France's financial marketplace. The FBF welcomes the government's proposals aimed at modernising legislation and improving regulation. In the interests of consistency, it also requests that local obstacles to transaction activities in Paris be removed. Indeed, the wide open competition and best execution requirements imposed by the MiFID today are incompatible with the taxes currently applied to market operations that are paid by French operators alone.

Paris has the expertise, resources and technology to develop the financial activities needed to support France's economy, growth and employment. It must not be forced to concede its business to other marketplaces that are less familiar with the needs of national investors, particularly SMEs. The immediate goal of this collective mobilisation in favour of the French finance industry must be the urgent abolishing of this tax which stints the country's growth.

* multi-lateral trading facilities, internalisation systems

** financial instruments include equities, bonds, UCITS (mutual and investment funds), forward financial instruments, etc.


Colette Cova
email : ccova@fbf.fr
Tel : 01 48 00 50 07

Kenza Benqeddi
email : kbenqeddi@fbf.fr
Tel : 01 48 00 50 08

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