MiFID II will have seismic implications for European asset management firms but too much of the detail is being left open to interpretation and inference, Comgest’s CEO Arnaud Cosserat has said.
Speaking to Citywire Selector, Cosserat said the move to increase transparency and improve client experience under the regulation – which comes into effect on January 1 2018 – is welcomed but too much vagueness persists.
‘I would actually have preferred stricter regulation. If it had been laws and rules rather than guidelines then I think, and I am speaking for a number of people here not just us, there wouldn’t be as little clarity in certain grey areas as we are experiencing now,’ he said.
Cosserat said one issue that is particularly pertinent for asset managers is around payment for research from external sources, notably brokerage firms. But, he said, there needs to be more definition of what is and isn’t permitted.
‘For example, if they had said by next year X per cent product research has to be paid for by the fund manager, and then the next year it will rise to x per cent and then finally it would be 100% or the company will be penalised, that is clear and that is tangible. It isn’t like that.
‘At the moment, we are in a situation where brokers are expecting asset managers to price it for them but that is not the most effective way. That is essentially going into a restaurant, eating a meal and then paying whatever you think at the end. It needs to be clearer if we are going to do the right thing for clients in how the capital is allocated for research purposes.’
Cosserat said there are also questions over how the directive will be transposed in different jurisdictions and questioned if enough support has been given to asset managers in different geographies.
‘What we have seen in terms of the level of FCA guidance varies differently from what we have seen in France, for example. So, while a one-size-fits-all approach may not realistic or feasible and the devil will be in the details, but that is the point, we need that detail.’