Navigating the MiFID II maze

Christian Pickel

As financial analysts put away the Christmas decorations and prepare for the January return to work, they will be returning to a landscape that has been transformed by MiFID II.

This is not an alien invasion – it is in fact the Markets in Financial Instruments Directive, a piece of EU legislation designed to regulate the way financial analysis is provided and paid for. In other words, it promises to have a significant bearing on a great many MHP Financial clients and other businesses operating in the financial sector.

It’s a particularly big deal for those dealing, broking and providing advisory services for banks, non-banks and similar firms. That means we need to prepare and be ready with our clients.

But what will change under MiFID II? In short, financial services companies who provide any type of financial advice over the phone must record phone calls, and formalise face-to-face meetings with minutes taken to keep a full account. The updated regulation also sets out how asset managers pay for their research.

With MiFID II on the horizon, fund managers will be forced to budget separately for “unbundled” research and trading costs.

On the Capital Markets side, under MiFID II, companies need to pass a quality enhancement test, which basically states whether or not a client benefits from the services rendered by the company.

The sheer complexity of MiFID II is astonishing and many investment firms in the UK and throughout the EU are finding navigating through the MiFID II maze a significant challenge – no wonder with 1.4m paragraphs of complex new regulations.

At MHP, we are in constant dialogue with our clients, the industry and the regulator at the same time. Indeed, to help our clients navigating the way through the MiFID minefield, we are hosting a panel discussion on November 28 at our offices in Agar Street, London, WC2N 4HN. The panellists include MiFID expert from the FCA, Stephen Hanks, Fund Manager Gervais Williams, CEO of Peel Hunt Steven Fine and Financial News Editor, Lucy McNulty.

Ultimately, the regulator in Brussels has made one thing clear – there will be no deadline extension beyond January 3rd, 2018. Preparation will be key, and all of us at MHP will be on hand to advise our clients on the way to MiFID II.

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