1. Implementation of Markets in Financial Instruments Directive (MiFID) Toni Lukšić Croatian Financial Services Supervisory Agency Split, 14 June 2007

2. Securities Market Act  Securities Market Act (2002) partially aligned with the relevant acquis.  Amendments to the Securities Market Act (December 2006) Further aligned with the relevant acquis most notably in: –Operating conditions of authorised companies and regulated public markets; –Investor protection; –Market transparency –Business of authorised companies (derivatives transactions included)

3. Securities Market Act  Amendments to the Securities Market Act do not: Include definitions of the following terms: –Multilateral trading facilities (MTFs), systematic internalisers, market operators, financial instruments, tied agents, eligible counterparties List certain activities that authorised companies may perform nor do they classify those activities in line with MiFID directive. MiFID provisions not included in the Securities Market Act –Pre- and post-trade transparency obligations for investment firms, MTFs and regulated markets; –Client order handling and execution

4. New Capital Market Act  Full alignment with MiFID The act will also be fully aligned with acquis regulating: –Conditions for admission for trading and transparency obligations of traded companies; –Contents of prospectuses; –Market abuse; –Investor compensation schemes; –Capital adequacy and –Settlement finality.

5. New Capital Market Act – Time schedule Preparation of the First Draft Proposal of the Capital Market Act30 September 2007 First Draft Proposal of the Capital Market Act to be discussed by HANFA and MF representatives 31 October 2007 Preparation of the Second Draft Proposal of the Capital Market Act30 November 2007 Second Draft Proposal of the Capital Market Act to be discussed by HANFA and MF representatives 15 December 2007 Preparation of the Final Proposal of the Capital Market Act30 December 2007 Final Proposal of the Capital Market Act to be submitted to the MF for comments 15 January 2008 Final Proposal of the Capital Market Act to be submitted to the EC for comments 15 March 2008 Final Proposal of the Capital Market Act to be submitted to the adoption procedure upon receipt of the EC comments 15 April 2008

6. New Capital Market Act Working group on Capital Market Act –Market abuse –Issuers –MiFID HANFA, Ministry of Finance, ZSE, brokerage firms, banks, Central Depositary Agency and legal experts TAIEX – experts from Member States

7. Current Alignment with MiFID - Ordinances Ordinance on conduct of business of authorised companies Ordinance on the notification of the Croatian Financial Services Supervisory Agency of the disposal of shares or holdings in a brokerage company, the Central Depositary Agency or on a stock exchange –For qualifying holding Ordinance on issuance of licences to authorised companies, brokers and investment advisors, and on granting authorisations to members of management boards and managers in authorised companies Ordinance on the content of documentation submitted with the application for the issuance of a licence to candidates for members of the management board

8. Current Alignment with MiFID – Ordinances in preparation Ordinance on client classification –Client categorisation based on their knowledge, experience, financial situation and investment objectives. –Professional and retail clients are defined –The ordinance does not define eligible counterparties

9. Current Alignment with MiFID – Ordinances in preparation Ordinance on the prevention of conflict of interest –type of conflict of interest which can occur while carrying out business activities of an authorised company, –measures to prevent conflict of interest which an authorised company is obliged to take for the purpose of preventing the conflict of interest whose existence may damage the interests of the clients, –organisational and administrative rules of conduct authorised companies are obliged to adopt and apply for the purpose of preventing conflict of interest.

10. Thank you for your attention