Lisa Hamer – Compliance Director
Forthcoming New Legislation – Markets in Financial Instruments Directive (MiFID)
MiFID is a wide-ranging piece of legislation from Europe, that seeks to promote a single market for transactions in financial instruments throughout Europe and also to address issues raised by the financial crisis. It is currently under review and the changes are due to be implemented from January 2018.
Many changes will occur ‘’behind the scenes’’ and clients will not see or feel any direct impact on the services they receive. However, the changes below will have a visible and direct impact on our clients.
1. Transaction Reporting
Transaction reporting in January 2018 will undergo a number of significant changes and, most notably, we must include details of the underlying beneficial owner of the assets in our dealing instructions.
This means that individuals and entities must have unique ‘’Identifiers’’ from January 2018 onwards.
- The Identifier for individual beneficial owners will be the National Insurance Number in most cases and we shall contact any clients where we do not already hold this information.
- The Identifier for entities (trusts, charities, companies etc.) will be a ‘’Legal Entity Identifier’’ (LEI) which will need to be applied for by the entity. In the UK, LEIs will be issued by the London Stock Exchange for which there is an initial and on-going annual maintenance charge. We are looking into this and will issue further information to our clients regarding how to apply for a LEI.
This requirement has a significant impact on our clients in that we will not be able to deal unless we have the required ‘’Identifier’’ for the beneficial owner of those assets.
2. Performance reporting
Another significant change is that investment reports will be issued on a quarterly basis, as a minimum. In addition to the quarterly reports, should the value of the portfolio fall by more than 10% during the reporting period, a further report must be issued at that time.
There are a number of ‘grey areas’ awaiting further clarification in connection with the 10% reporting requirement but it does mean that, from January 2018, clients will be receiving reports more frequently than now.