What will MiFID II mean for your clients with Rathbones?
Reforming European financial markets
In response to the 2008 financial crisis, the European Union committed to improving the way in which it regulates the operation of financial markets within its jurisdiction — aiming to strengthen investor protection and increase financial market transparency. Regardless of Brexit negotiations, the Financial Conduct Authority (FCA) has already committed to complying with the resulting MiFID II legislation.
With MiFID II due to come into effect on 3 January 2018, we are devoting much of 2017 to working with clients to ensure the following key changes have been successfully implemented ahead of the deadline.
In a note, we have identified the key elements of the legislation and outlined how we are tackling them on behalf of our clients; the note includes comment on:
Ensuring investment solutions are suitable for the client’s needs
There is a requirement to complete an ‘assessment of the suitability of the recommendations given [to the client] at least annually’.
How will we achieve best execution for clients?
MiFID II mandates firms to take ‘all sufficient steps’ to achieve best execution for their clients, and applies to all asset classes.
How will we meet the requirement for increased client communications?
It will be mandatory for client valuation packs to be issued on a quarterly basis.
How will the requirement for increased transaction reporting be met?
To enhance market transparency, MiFID II mandates all financial institutions to increase the amount of information they report to the London Stock Exchange (LSE) on a daily basis.
Will there be any standardising of the identification of market participants?
To further combat market abuse, MiFID II will also classify all charities, trusts (excluding bare trusts) companies and pensions (excluding SIPPs) as legal entities. For reporting purposes, all entities will need to be identified by a Legal Entity Identifier (LEI) code.
We also comment on packaged retail and insurance-based investment products (PRIIPs); record-keeping; acting in the best interests of the client over the product lifecycle and for your information, payments for investment research.