Top 5 MiFID II actions for pension schemes

RegulationsThe clock is ticking for the January 3, 2018, introduction of MiFID II – the revised Markets in Financial Instruments Directive – and the UK’s trade body for pension schemes has issued a guide for members.

The top five MiFID II action points from the Pensions and Lifetime Savings Association (PLSA) are:

  • Assess the value of investment research: Will your asset managers pay for research themselves?
  • For local authorities, consider ‘opting out’: Local authorities are considered as ‘retail’ clients for MiFID II but can opt to become professional clients if it aids their investment strategy, such as in the use of alternative investments
  • Identify your legal entity identifier (LEI): More investment organisations will need a unique code, the LEI, to trade
  • Get to grips with best execution and cost disclosures: Investment firms have to take “all sufficient steps” to get the best results on client orders, and disclose costs
  • Think about investment management agreements: MiFID II requires changes to these, for example, to reflect best execution policies

Caroline Escott, investment and defined benefit policy lead at the PLSA, said: “There has been some discussion about a lack of preparedness amongst asset managers, businesses and financial institutions, but it’s just as important that pension schemes know what needs to be done to ensure a smooth transition to the new rules.

“The top five actions outlined in our guide are intended to help schemes prepare and prioritise to avoid any issues or a last minute rush. But MiFID II also presents the perfect opportunity for schemes to seriously consider how they use their managers and we hope this guide will help instigate such reviews.”

The free guide is available here.

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