The Markets in Financial Instruments Directive, finally implemented in Poland after a delay of almost two years, brings many important changes:
Stronger investor protection
- classifying clients into professional and retail categories and treating specific categories differently
- requiring clients to be given straightforward, complete and reliable information before and after a transaction, especially about the risks of investing in financial instruments
- implementing the "best execution" principle by carrying out instructions in the most favourable manner for the client and being required to act in the client's best interests
- being required to avoid conflicts of interests as regards clients
- giving clients equal legal protection, regardless of what business is being transacted for them
- improving the compensation system
- abolishing the monopoly of the National Depository for Securities by making it possible to choose who will reconcile and settle regulated market transactions
- expanding the catalogue of financial instruments.
- limiting the outsourcing of services by brokerage houses and the NDS
- making the acquisition of brokerage house shares conditional on the FSC not objecting after being notified of the intention to acquire shares above a certain threshold
- requiring investment companies to supervise their agents
- expanding the financial counselling service to cover all recommendations meeting the statutory criteria, regardless of their subject matter (to date the FSC permit has only been required for investment counselling on the scope of financial instruments admitted to organised trading).
Other changes have also been made that were not required by MiFID but dictated by market practice
- improving the short-selling process by introducing conditions under which the securities do not need to be posted on the seller's account before the sale is concluded
- stipulating that any approvals, permits or registry entries that may be required to conduct an investment business (eg in the investment company agents' register) do not automatically pass to the transferee on acquiring that business and must be reapplied for.
Law: amendments to the Act on Trading in Financial Instruments, the Act on Capital Market Supervision
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 27/10/2009.