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The Markets in Financial Instruments Directive, Mifid (Directive 2004/39/EC) is now fully implemented in Swedish legislation. Mifid has been implemented by the adoption of a new Capital Markets Act (lag (2007:258) om värdepappersmarknaden) that enters into force on November 1 2007. The Capital Markets Act will replace the Securities Operations Business Act (lag (1991:981) om värdepappersrörelse) and the Exchange- and Clearing Operations Act (lag (1992:543) om börs- och clearingverksamhet).

The Implementation Regulation (Regulation 1287/2006) is directly applicable in Sweden and the Implementation Directive (2006/73/EC) has been implemented in two regulations issued by the Swedish Financial Supervisory Authority (Finansinspektionen, SFSA), FFFS 2007:16 Regulations regarding Securities Operations Business (föreskrifter om värdepappersrörelse) and FFFS 2007:16 Regulations regarding Business on the Capital Market (föreskrifter om verksamhet på värdepappersmarknaden). The SFSA regulations will also enter into force on November 1 this year.

Key issues

The SFSA is the authorised authority in respect of Mifid in Sweden. The authority will maintain the register of licensed companies.

The approach taken by the Swedish legislator has been to avoid gold plating in the implementation work. Thus, the wording of the new Capital Markets Act closely follows the wording in Mifid. The implementation directive has been implemented by a copy-and-paste exercise into the SFSA regulations. However, the current requirement to record telephone lines on dealer desks has been kept in the new SFSA regulation. The general retention period of five years laid down in Mifid also applies to recorded tapes. This is a change compared to the current Swedish requirement, as recorded tapes are currently kept for 14 months.

Additionally, the current provisions set out in the Act on Financial Advice to Consumers (lag (2003:862) om finansiell rådgivning till konsumenter) explicitly stipulating liability for an entity that intentionally or negligently causes economic loss when providing such advice will also apply to securities operations companies. The other requirements in the Act on Financial Advice to Consumers regarding, inter alia, collection of information in respect of the consumer, documentation and the level of knowledge among the advisors do not apply to institutes subject to the Capital Markets Act. Other institutes, such as banks, providing financial advice to consumers, have to fully comply with the Act on Financial Advice to Consumers.

The mandatory exemptions from the scope of Mifid provided in Article 2, inter alia, services only provided within a group of companies and in respect of insurance companies, will be implemented in the new Capital Markets Act. As an additional Swedish exemption insurance brokers are exempted from the scope of the new Capital Markets Act. The exemption also includes advice regarding fund units within the insurance business.

The pre- and post-transparency requirements applicable to subjects operating a Regulated Market or MTF set out in Mifid are implemented in the new Capital Markets Act. Only shares admitted to trading on a Regulated Market are covered by the transparency requirements. The Swedish legislator has added a local requirement for other financial instruments. Exchanges and securities operations companies conducting a MTF are required to publish information regarding trading in other financial instruments admitted to trading on a regulated market to the extent required to secure proper transparency, considering the scope and nature of the activities. This requirement applies both to pre- and post-trade information.

The possibility provided in Mifid to assign a Tied Agent (anknutet ombud) is implemented in the Capital Markets Act. Tied Agents will be registered with the Swedish Companies Registration Office (Bolagsverket).

The term Regulated Market is used in the Capital Markets Act. In Sweden the Stockholm Stock Exchange and the Nordic Growth Market (NGM) will become Regulated Markets under the new legislation. These market places are currently authorised as exchanges under the Exchange- and Clearing Operations Act. The term Authorised Marketplace will be abandoned when the Capital Markets Act becomes effective. Aktietorget, which is an authorised market place, will become a MTF under the new legislation. Other examples of market places in Sweden, which will become MTFs under the new legislation, are First North and Nordic OTC.

The concept of Systematic Internalisers, institutions which on an organised, frequent and systematic basis deal on their own account by executing client orders outside a regulated market or MTF, is new to Swedish legislation and the legal regime applicable to such subjects provided in Mifid is implemented in the Capital Markets Act. The general opinion amongst Swedish market participants is that is likely that only a few institutions will become Systematic Internalisers.

Lina Williamsson

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