36 / 72
Markets and Securities Services | Issue 46
34
Q4 Will your firm be caught as an MTF, and
therefore require authorisation?
None of the asset managers taking part in the
survey believe that their firms will be caught
as MTFs and, as such, they will not require any
additional authorisation.
Q5 Will your firm result in being captured
under the extended definition of a systematic
internaliser (SI)?
Similarly, the extended definition of an SI is
not considered to pose any problems, as no
respondents think that they will be captured.
Though one advises that they are still analysing
the requirements.
Investment research
MiFiD II imposes stringent conditions on
clients’ payments for research, including,
as a possible option, the use of a dedicated
research payment account (RPA) and
regular assessments of research quality.
Requirements are contained within the
Delegated Directive — (C (2016) 2031 final)
published on 7 April 2016.
Q6 How will your firm pay for broker research
under the revised regime?
Option A: Directly from the firm’s P&L?
Option B: Via the operation of an RPA?
Option C: Still to be determined?
The decision on whether or not to pay for
investment research directly out of a firm’s P&L
or to establish (and operate) an RPA is still very
much an open question. Of the asset managers
taking part in the survey, less than a third are
definite on their solution.
A small percentage advise that they would pay
out of P&L, while a similar number of firms have
opted to proceed through the use of an RPA.
However, the majority of respondents advise
that they have not yet made a final decision.
This is less due to paralysis than to ongoing
analysis of business models; assessments of the
advantages and disadvantages of each model;
and taking into account their clients’ interests.
Q7 If your firm has chosen to operate an RPA,
do you plan to outsource to a third party?
While only a relatively small percentage of the
respondents indicate that they will be using
an RPA, just under half of the asset managers
surveyed believe that if they choose to operate
an RPA, then its operation will be outsourced to
a third party.
Q8 Will the analysis of charges that require
disclosure to investors be done manually
or via an automated system?
The majority of asset managers advise that
an automated system will be used where
their analysis of charges require disclosure to
investors. A significantly lower number advise
they will undertake this work manually, while a
similar number have yet to reach a decision.
Q9 If via an automated system, has this
required a system development/build?
Just under 60% of asset managers confirm that
the use of an automated system will require time
to be spent on system development/build and
incurring the inevitable costs, and while only a
small percentage indicate that no such system
development/build will be necessary, under a
third advise this still needs to be confirmed.
Q10 If YES, how long did this or will this take?
The responses to this question are varied and
ranged in terms of timing from 6 to 12 months,
with qualifications on the latter timeframe
that this will be a full-time project, to other
managers advising that work has not begun and
are reticent to advise an expected timeframe.
Based on the 3 January 2018 revised
implementation date for MiFID II/MiFIR, then 12
months seems to be the maximum timeframe.
Q11 Will you continue to use Commission
Sharing Agreements (CSAs) adapted to meet
the requirements under MiFID II?
On the question of whether CSAs, adapted to
meet the requirements under MiFID II, will be
used, asset managers are not consistent in their
approach, as numbers are split fairly equally
between those who will continue to use and
those who say they won’t.