05 January 2018
Reporter: Jenna Lomax

Industry participants react to MiFID II

The second Markets in Financial Instruments Directive (MiFID II) “is a punishment tax on an industry that simply doesn’t work as it drives up the participation cost for the public at large”, according to Steve Grob, director at Fidessa.

Grob’s comments come just a few days after the big build up to the launch of MiFID II that went live on 3 January after three years in the making.

MiFID II regulates firms that provide any services to clients linked to financial instruments and venues where these instruments are traded.

Grob suggested that the two things that struck him the most about the implementation is the “enormity of the industry effort involved in getting ready” and “the almost complete insignificance of it all”.

He said: “Given the choice I suspect the outside world would have preferred this money and effort expended on something else.”

Others in the industry welcomed the introduction of the directive, with Charles Owen, founder of CoInvestor, revealing that CoInvestor are “fully aligned with financial advisers on this”.

Owen commented: “Getting the best for the advisers on our platform involves providing greater visibility and more easily comparable information, which a suite of new regulations now require, not just MiFID II, but also Packaged Retail and Insurance-based Investment Products (PRIIPS).”

However, Owen noted that although 3 January was the deadline for MiFID II, the “better standardisation won’t be something to be ticked and filed away. It will be a continual improvement in practices and we know that will benefit the end investor."

The Personal Investment Management & Financial Advice Association (PIMFA) also weighed, with the statement: “Seven years in the making, with a budget of over $2 billion and running in compliance costs, the monster movie that is MiFID II is finally on general release.”

In the statement, PIMFA, said: “At the time of writing, the script is not yet complete, many areas of the new law and regulations remain opaque and greater understanding is needed before firms and their overburdened compliance officers can fully get to grips with exactly what they have to achieve.”

PIFMA explained that at one point even the Financial Conduct Authority (FCA), as the UK’s regulatory authority, were unable to “give guidance on European guidance and are consequently uncertain how best to put some of these elements into practice”.

Though the UK’s Financial Conduct Authority has now confirmed it will act if pricing reaches a stage where research appears significantly undervalued.

Ian Cornwall, director of regulation at PIFMA, said: “As the FCA recognises, the MiFID II project will continue in 2018 as the rules bed down and further information is released by the European supervisory body.”

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