Update

European Regulation

	MiFID Implementation

The key focus of the FOA and MiFID Connect since April has been on the need for CESR (and the FSA) to adopt a pragmatic approach towards transaction reporting – and, to this end, the FOA and MiFID Connect have been working in a FESE-led Coalition – and to EU branch regulation, “passporting”, inducements and, of course, best execution. Aside from the unnecessary broad scope of the application of inducements, the outcome in these areas is probably the best that can be achieved, particularly when full advantage is taken of the “starting point” proposals in these areas. The question of transaction reporting will continue to come under discussion, but, as members will be aware from recent FOA communications and the latest edition of FSA's Market Watch, considerable progress has been made towards establishing a “standstill” as regards derivative instruments, pending the outcome of further review which will continue through to mid/late 2008. The latest position as regards the application of ISINs was set out in the letter sent by FESE on behalf of the Coalition associations, and this can be viewed here

The last few months has also seen the completion of the project to update the standardised documentation to become MiFID compliant (click here), the issuance of the second part of the MiFID Connect Survival Guide, the last open meeting on MiFID implementation for members of MiFID Connect's participating industry associations which took place on 18th June and FSA “confirmation” of the MiFID Connect guidelines on research and suitability and appropriateness and the issue of a memorandum on conflicts of interest management (which follows FSA “confirmation” of the MiFID Connect outsourcing guideline). Members should note that, in view of the amount of paper that has been produced on best execution, MiFID Connect has decided not to issue any further guidance to that which appears on their site. However, in recognition of the fact that some firms in certain financial service sectors would still appreciate guidance, the FOA, in association with The American Foreign Bankers' Association, hopes to produce these within the next 2-3 weeks for our respective memberships.

	The European Commission's Commodities Review

Following the response by EFET, FOA and ISDA to the Commission's Call for Evidence, the associations have now submitted their response to CEBS click here to view.

In the last edition of the Update, the FOA stated that it had appointed Simmons & Simmons and Denton Wilde Sapte to produce between them a set of legal opinions which would cover the rights and conditions of market / trading access in commodity derivatives across a number of EU and non-EU jurisdictions identified by member firms. Both firms have now commenced work and the FOA is currently putting together a list of firms who would like to subscribe to either the list of EU or the list of non-EU jurisdictions, or both of them. Any firm wishing to subscribe for the list of opinions should contact Anthony Belchambers to that effect as soon as possible so that costings may be finalised. Details of the project, including particularly a list of “target” jurisdictions and the kind of questions that will be answered in respect of each of those jurisdictions can be viewed here .

	EU/US Financial Services Regulatory Dialogue

The EU/US Coalition on Financial Regulation, working with Clifford Chance, intends producing its second report on industry priorities for the dialogue in late Autumn and, to this end, has produced a draft list of a “targeted” priorities for regulatory convergence which have been identified to the Coalition by various firms for comment and review by practitioners before finalisation. This list – which is still the subject of consultation – can be viewed hereon here.

In view of the September meeting that took place between the European Commission and the SEC, the FOA circulated in advance of that meeting a copy of the draft list to those and other organisations in order to provide them with an early indication of the work that is being carried on by the industry. In addition, the FOA organised, on behalf of the Coalition, a series of pre-meetings with SEC, CFTC, the US Treasury and other interested parties and received a very positive response to the list.

The European Banking Federation is now participating in the Coalition as an observer.

For further information, please contact the Coalition Secretariat (Anthony Belchambers), which is based at the offices of the FOA. A briefing note on the Coalition can be viewed here.