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Global Trustee and Fiduciary Services News and Views | MiFID II Special Edition 2016
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Q1 Have you undertaken any analysis of your
non-UCITS retail schemes (or equivalent)
to see whether they could be sold on an
“‘execution-only” basis?
Apart from those asset managers whose product
ranges do not include non-UCITS retail scheme
products (or equivalent), all respondents confirm
that they have undertaken the relevant analysis.
One respondent advises that they are awaiting
legal confirmation that certain funds are out
of scope for MiFID II, but the analysis has been
undertaken as a precautionary measure.
Q2 Have you identified any non-UCITS retail
scheme products (or equivalent) that would
not meet the requirements to enable them to
be sold on an “execution-only” basis?
All bar one respondent advises that no non-UCITS
retail scheme products (or equivalent) have been
identified by the asset management firms surveyed
as not meeting the requirements to enable them to
be sold on an “execution-only” basis.
Where one respondent flags yes in answer to this
question, unfortunately further information has
not been provided.
Trading venues
MiFID II/MiFIR introduces new types of
trading venues, such as Organised Trading
Facilities (OTFs).
Alongside regulated markets (RMs) and
multilateral trading facilities (MTFs), this
will be a third type of multilateral system
in which multiple buying and selling
interests can interact in a way that results
in contracts. However, unlike RMs and MTFs,
OTFs will only relate to bonds, structured
finance products, emission allowances or
derivatives. Operating an OTF will be an
investment service so a person wishing
to do so will need to be licensed as an
investment firm. The operator of a RM will
also be able to operate an OTF.
There has also been an extension of the
Systematic Internaliser (SI) regime. This
is a firm that deals on own account when
executing client orders outside a trading
venue. The definition of an SI has been
updated to reflect the introduction of
OTFs and to provide that a SI must deal
on a substantial, as well as an organised,
frequent and systematic basis.
Q3 Will the introduction and authorisation of
new types of trading venues change the way
in which your firm will place transactions?
There are mixed responses to this question,
with an equal split between firms that believe
the introduction and authorisation of new types
of trading venues will change the way in which
their firms place transactions and firms that do
not believe it will.
By contrast, a minority of respondents believe
it is too early to tell, with no clear view yet as
to how OTFs will operate and how existing MTFs
and/or other venue types will be authorised
and operate. As a result, at this stage, it is
not considered possible to be sure how or
indeed whether this might eventually affect
transactions.
A concern also expressed is that the impact
of transparency requirements, particularly in
relation to bond market liquidity, may impact in
a negative manner the trading that is done in
these markets.