What are our credentials?

Context

• The Market in Financial Instruments Directive (MiFID) was enforced in November 2007.
• EU-based Banks were in scope of MiFID and had therefore to update their organisation, processes, procedures and IT to reflect the mandatory changes required by MiFID (by November 2007).
• PwC was hired by several leading EU Banks to provide support in assessing their "MiFID readiness" and in implementing MiFID requirements (in their Head Office and in their affiliated entities).

PwC Advice

The standard approach developed by PwC in 2006-2007 for the roll-out of MiFID implementation projects was the following:

• Performance of a regulatory gap analysis to define the Bank's readiness with regard to MiFID (on the three MiFID pillars: clients, markets and governance & organisation).
• Recommendations for all gaps identified, including the documentation and the prioritization of these gaps.
• Elaboration of the implementation roadmap and of the roll-out planning.
• Ad-hoc support to the global MiFID project team (project management, communication and change management, including MiFID trainings).

Results and Added-Value

• Gap assessment matrix (with the description of the business gaps and the associated compliance risks).
• List of recommendations for each gap identified.
• Implementation roadmap and roll-out planning.
• Drafting of operational procedures, policies and documentation (legal documents, client communication).
• PwC project and change management methodologies.
• Leverage on experiences in other MiFID projects within the PwC network.

Context

• The Market in Financial Instruments Directive (MiFID) was enforced in November 2007.
• The Luxembourg subsidiary of the Swiss Private Banking Group was in scope of MiFID and had therefore to update its organisation, processes, procedures and IT to reflect the mandatory changes required by MiFID.
• PwC was mandated to provide support in implementing MiFID requirements in Luxembourg and to other jurisdictions.
• Cross-territory use of the gap assessment approach developed by PwC with other client entities.

PwC Advice

The activities and services performed by PwC were the following:

• Performance of a regulatory gap analysis to define the client's readiness with regard to MiFID.
• Active participation within the 12 identified working groups, focusing around:
  • Support to the local project office team (i.e. project management).
  • Provision of technical support regarding MiFID and related topics (i.e. expert role).
  • Updating the client on the latest regulatory developments and representing it at the Luxembourg Banking Association (ABBL).
  • Drafting and proof-reading of MiFID compliant policies and procedures.
• Ad-hoc support to the global project team at Head office (e.g. document review, gap analysis approach, etc.).

Results and Added-Value

• Full MiFID compliance of selected European operations of client.
• Application of a harmonized gap analysis structure throughout the client's European entities (the approach developed by PwC was re-used in other territories).
• Leverage on experiences in other MiFID projects within the PwC network.

Context

• 6 years after implementation the client had identified a number of weaknesses in an important MiFID dimension: the Suitability & Appropriateness testing.
• These weaknesses had been highlighted in a first report drafted by PwC.
• Options and remedial actions were proposed to solve the MiFID compliance issues identified.
• The client asked PwC to conduct complementary business analysis and to elaborate a Business Requirement Definition document corresponding to the recommendations presented in the first report.

PwC Advice

The services delivered by PwC consisted in describing the business needs and detailing the functionalities corresponding to the MiFID remedial actions initially proposed, i.e.:

• Import client knowledge from the CRM system into the front office system.
• Change order entry screens in the front office system.
• Add rules to check suitability and appropriateness of client orders.
• Produce new deviation reports.

As the Luxembourg subsidiary acted as the Operation Hub for others European jurisdictions, the solutions developed by PwC were also implemented for entities based in other jurisdictions.

Results and Added-Value

• A list of MiFID weaknesses with proposed remedial actions.
• Workshops with the Risk Management, the Controls Team, the IT and the CRM (to find consensus on the proposed solutions).
• A Business Requirement Definition document describing the MiFID business needs and detailing the functionalities with regard to the MiFID weaknesses and remedial actions.

Context

• In 2010, the Bank mandated PwC to make a new MiFID Diagnostic, leveraging on the conclusions drawn in the 2007 Diagnostic (also made by PwC).

PwC Advice

The activities and services performed by PwC were the following:

• Identify the operational gaps in view of MiFID and the 2007 MiFID Diagnostic.
• Assess the level of compliance of the Bank with MiFID requirements (which gaps have been addressed since 2007).
• Draft the 2010 MiFID Diagnostic report to enable the Bank to take the actions necessary to fill-in the potential gaps.

The analysis of the existing situation and the identification of the gaps and recommendations have been made through:

• The analysis of the 2007 MiFID Diagnostic.
• The analysis of the processes, documentations and systems in place at the Bank.
• Several workshops with the Head of Operations, the Head of Compliance and the Head of Internal Audit.

Results and Added-Value

• An end-to-end assessment of MiFID processes, systems and documentation in place on the three MiFID pillars, i.e. clients, markets and organisation & governance (comparison between 2007 and 2010 implementation).
• Documentation of the MiFID weaknesses identified during the assessment.
• A list of MiFID compliant improvements and corrective measures in line with market practices.

Context

7 years after MiFID entry into force, the Bank has identified three main areas of improvements on MiFID clients aspects:

• Asset allocation grid: the grid to assess the risk associated with each instrument/client order was to complex and not linked to instrument characteristics available in the systems.
• Performance measurement against benchmark: there was no automatic measure of performance and no definition of benchmark for Portfolio Management Mandates.
• System related aspects: need for static data enrichment , IT controls, etc.

PwC Advice

The activities and services performed by PwC were the following:

• Review and analysis of existing MiFID documentation (procedures, assessment grid, communication to clients).
• Interviews with the Bank's stakeholders (Account manager, Middle office, Legal & Compliance, Risk and Controls).
• Analysis and testing of MiFID system functionalities (e.g. to identify the parameters available in the securities master-file).
• Documentation of gaps and weaknesses identified (in terms of compliance with MiFID texts, market practice and feedback from the Bank's stakeholders).
• Propositions of improvements and corrective measures in the light of MiFID II and review and validation of these improvements and corrective measures.
• Drafting of the documents supporting the improvement and corrective measures (i.e. drafting of the new MiFID procedure and the new assessment grid).

Results and Added-Value

• An end-to-end assessment of MiFID processes, systems and documentation in place.
• Documentation of MiFID weaknesses identified during the assessment, with proposed remedial actions.
• A list of MiFID compliant improvements and corrective measures in line with market practice and in light of MiFID II.
• Concrete examples of solutions (e.g. new asset allocation grid, new MiFID questionnaire, new decision tree for the suitability and appropriateness testing, new MiFID controls framework).