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Fund firms struggle with MiFID II

The upcoming Markets in Financial Instruments Directive II (MiFID II) has left the fund management industry in some disarray, with little consensus on what the directive means for business operations.

Funds Europe in collaboration with Calastone, a global transaction network, surveyed 160 market participants about the impact of MiFID II and revealed the results at FundForum International, a conference taking place in Berlin this week.

Twenty seven per cent of respondents felt they were fully aware of MiFID II’s implications, with the largest group (34%) saying that they were trying to assess the directive in conjunction with other regulations – such as Ucits V, Priips and Dodd-Frank – to integrate regulatory implementation.

Just over a quarter said that they had started the planning process but had not yet implemented any measures.

Many were waiting to see how their peers responded to MiFID II content, such as product suitability.  For example, 38% of respondents said they were aware of the rules on product suitability, but were waiting for an industry agreement before acting.

About half of those surveyed said they were aware of the rules but almost a quarter (24%) were still working out the meaning of the rules.

MiFID II concerns the relationship between fund manufacturers and their distributors. It covers areas such as product suitability, the distribution chain and target markets.

The majority of respondents said they felt poor service or the selling of unsuitable products by distribution partners could damage an asset manager’s own brand. Only 3% disagreed. The finding suggests that there is recognition of the link between the conduct of distributors and brand damage for asset managers.

Rob Swan, managing director, data services at Calastone, said: “There are some managers who are aware, some who are misguided and some with their heads in the sand.”

©2016 funds europe