The Markets in Financial Instruments Directive (MiFID) is intended to harmonise market and regulatory regimes across the EU. It replaces the Investment Services Directive.

UK implementation will be by HM Treasury and amendments to the FSA's handbook. MiFID is due to come into force in November 2007.

Authorisation and Passporting Firms will be regulated in their 'home state' but use a MiFID 'passport' to provide services in other EU states.

Client Classification Clients must be classified as eligible counterparties, professional clients or retail clients with increasing levels of protection.

Order Handling covers information capture, ensuring a firm acts in a client's best interests and how orders may be aggregated.

Transparency New systems will be needed to provide transparency both pre and post trade.

Best Execution on behalf of a client, including costs and likelihood of execution, is now mandatory.

Systematic Internalisers Organisations executing client orders against their own books will be treated as mini-exchanges.

Requirements relating to spreadsheet risk are likely to include:-

Business Continuity

Risk Assessment, Management and Mitigation

Internal Audit

IT Systems and Processing

Outsourcing of Important Functions

Definitive rules and guidance from the FSA are expected to be available on 31 January 2007.