MiFID

Markets in Financial Instruments Directive.

LAMFALUSSY PROCESS

The Lamfalussy Process is an approach to the development of financial service industry regulations used by the European Union. Originally developed in March of 2001, it is named after the chair of the EU advisory committee that created it, Alexandre Lamfalussy. It is composed of four "levels," each focusing on a specific stage of the implementation of legislation.

FSA

Financial Services Authority ( UK ).

AMF

In France, AMF is "Autorité des Marchés Financiers".

OTC MARKET

A decentralized market of securities not listed on an exchange where market participants trade over the telephone, facsimile or electronic network instead of a physical trading floor. There is no central exchange or meeting place for this market. Also referred to as the "OTC market".

MARKET ABUSE DIRECTIVE

Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the notification of suspicious transactions.

SYSTEMATIC INTERNALIZER

A Systematic Internaliser is a firm that executes orders from its clients against its own book or against orders from other clients. MiFID will treat Systematic Internalisers as mini-exchanges, hence, for example, they will be subject to pre-trade and post-trade transparency requirements.

BEST EXECUTION RULE

The Best Execution rule: The best-execution requirement is a best-efforts obligation under which ISPs must take "all reasonable steps" to obtain the best possible result when executing orders for their clients.
(MiFID Article 21).

ELIGIBLE COUNTERPARTY REGIME

The Implementation of the ISD highlighted the difficulty of applying client protection rules to entities that trade with an ISP on an equal footing. Because of this difficulty, the category of "eligible counterparty" was introduced into MiFID. ISPs are not required to meet the best-execution rule when they trade with eligible counterparties or arrange transactions between two such counterparties. This Eligible counterparty regime is intended to clarify the situations described above in which, strictly speaking, there is no execution of client orders. Eligible counterparties may, however, opt to be treated as professional clients and thus to benefit from the best-execution rule.

DATA RETENTION

Article 21.5 of MiFID requires an ISP to be able to demonstrate to its clients, at their
request, that it has executed their orders in accordance with its execution policy. This
implies that the ISP will have to be able to provide the evidence needed to reconstruct the
conditions in which an order was executed, by retaining the necessary data (directly or by using a sub-contractor such as a data provider). Note that the standard duration of data retention required by the directive is five years.

CLIENT KNOWLEDGE

Improve knowledge of clients by capturing additional information for suitability assessment and client classification. Requirement for the development ofstandardized processes for the acquisition of customers.

PASSPORTING RIGHTS

MiFID simplifies the operation of a single passport across multipleEU countries for investment activities.

MONITORING & REPORTING

Develop surveillance systems, maintain detailed history of customer quotes and trades and incorporate ability to report on and demonstrate compliance.