Stockbrokers, derivatives traders and foreign exchange trading houses form an important part of our client base.
The traditional stock broking sector has polarised between firms which focus on private client investment management, handling discretionary and advisory portfolios, where the conduct of business requirements are at their highest and those which provide execution only brokerage services and trading platforms. We assist firms across the spectrum of this sector with their differing requirements both under the current regime and looking to the future under MiFID.
Many of our clients in this area have significant dealings with private clients and accordingly must comply with extensive conduct of business requirements, at their most stringent where discretionary management is involved. We can assist these firms with the interpretation and practical application of these complex requirements and with monitoring compliance. We have considerable experience in relation to client documentation requirements and can assist firms in preparing appropriate client agreements and terms of business. We have recently advised clients in relation to best execution and transaction reporting requirements and are well placed to review these types of arrangement.
We can assist with compliance reviews and with the preparation, updating and checking of compliance documentation and monitoring programmes or preparation for FSA ARROW review visits. We can assist with other major projects where firms change direction, such as varying scope of permission, or transfer of business and clients where firms consolidate or re-structure.
We provide a full outsourced compliance service for some firms in this sector so that they are able to focus on their core business whilst knowing that we will alert them to any changes they need to make as well as dealing with day to day compliance issues. We work in partnership with such firms so that they set the culture and drive the direction of compliance and we advise and assist in implementing their plans.
Firms dealing with private clients are affected very significantly by MiFID and we continue to work with a number of brokerage clients in relation to MiFID implementation issues.
Examples of key issues for broker firms under MiFID include:
- Changes to client classification rules;
- Revised requirements in relation to suitability and "know your customer" information, including a new "appropriateness" test;
- Changes to customer documentation requirements;
- Expansion of the best execution regime to require all firms to have a policy based upon elements other than price alone.
In addition to the above we have experience assisting operators of alternative trading schemes (ATS) with the specific regulatory requirements that apply to such schemes. Following the introduction of MiFID these entities need a specific permission to act as operators of Multilateral Trading Facilities. We can assist firms understand the requirements to which they are subject and work with them to ensure that compliance arrangements work properly on the ground.
MiFID brings certain activities and instruments within the scope of regulation, for example commodity derivatives. We can advise on perimeter issues and how firms' activities bring them within the legislation and work with them to obtain the appropriate authorisation and permissions.