MiFID II mania

You couldn’t go anywhere at the end of 2017 without hearing about the stresses of MiFID II.

The new regulation came into effect on January 3 and was designed to offer greater protection for investors, as well as giving a much-needed boost to transparency in all asset classes.

In this gallery, Citywire Selector hears how top fund buyers from across Europe are now dealing with the new regulation and how it will affect their selection unit’s going forward.

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José María Martínez-Sanjuán

Santander AM (UK)

‘Clearly the spirit of the law is to increase the level of transparency for investors, which is always welcome. It also implies a bigger commitment in terms of better service and fair pricing. We know that this comes with a cost for the asset managers and there is a lot of talk about this in the investment community.

‘Another thing to consider is the fact that regulation is reshaping the needs of the fund selectors' clients and, in the future, there will be greater demand for a transparent rationale in manager selection.

‘I believe that it is a great opportunity to streamline and improve research processes as it becomes a critical step in the advisory chain, working towards clear communication. Although costly, it can set the basis for a more solid and sustainable industry.’

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Jonathan Cohen

Reyl & Cie (Switzerland)

'MiFID II is definitely really challenging for us. It’s a very difficult period, which leads us to believe that our compliance and legal teams have really improved their schedule, as there has been a lot of administrative paper work to deal with.

'The situation is a bit complicated for Switzerland in general because it won’t necessarily have to adhere to every MiFID II rule, depending on the client base, rules could be different. There has definitely been a lot of stress and I think it will continue.'

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Daniel Feix

C-Quadrat (Austria)

‘I think there are a lot of things to consider – for instance in regard of the new legislative framework, client classifications, new reporting requirements, product governance, etc. However, the flip side of the coin actually is that there is no negative impact on the way we are able to manage our funds.'

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Daniel Aymerich

Andbank (Spain)

‘MiFID II has a greater impact on the distribution side of the business. Technically speaking, when picking a fund from a peer group, the new regulation plays no part. But it does when we have to recommend a particular fund for a client, since the target market may force some restrictions.

'The side effect is that the increase in compliance and the operational workload is pushing institutions to a guided architecture. Therefore we may have to reduce the universe of fund managers with whom we work.

'Finally, new advisory structures such as robo advisors for the lower end investors, may require a focus on particular strategies, such as index funds.'

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Ian Crispo

Deutsche Bank (UK)

‘MiFID II will present a number of challenges in terms of distribution and more onerous reporting requirements for both distributors and fund managers. This includes for example showing costs in a much more transparent way.

'It will also depend on the type of distributor, so retail banks will have different challenges than private banks or wealth managers for instance. But generally there is going to be cost pressure and some pressure to allocate more to more cost efficient passive strategies like ETFs.

‘The challenge for us would be obviously to make sure that we continue to look at different markets and not only identify the best managers for those markets but move a step further and decide if it makes more sense to pick passive funds, smart beta as opposed to using an active managers only.’

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Patrick Roefs

Julius Baer (Switzerland)

‘Because of MiFID II operational costs increase and so do the client requirements. This can lead to banks having to automate processes and build new advisory platforms in order to ensure compliance and improved client experiences. In addition, banks and asset managers might consider closer cooperation in order to increase efficiency along the value chain.'

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