Ucits fund managers in the UK will be subject to rule changes for ‘best execution’ under capital market reforms, the regulator said yesterday.
But firms regulated by the Alternative Investment Fund Managers Directive will not be, the Financial Conduct Authority (FCA) said.
The FCA released its second policy statement on the rules implementing the updated Markets in Financial Instruments Directive (MiFID II), which is effective from January 3 next year. The full statement can be found here.
Monica Gogna, financial regulation partner at Ropes & Gray, said:
“Largely, the FCA appears to have taken the industry’s comments on board. One key differentiator appears to be their decision to not expand the best execution rules to AIFMs [alternative investment fund managers]. To me, this is an indication of a recognition of the differing appetites of risk that investors in AIFs and Ucits take when making investments.”
But it was warned that the final regulations of MiFID II were “likely to lose brokers business, analysts their jobs and also hit fund managers’ profits”.
Emma Cleveland, managing director of Cleveland & Co Associates, a legal adviser, was speaking about securities research payments, another major part of the extensive MiFID II reforms.
“If fund managers want to continue receiving valuable research from banks, they will be forced to reallocate more resources to pay for it which will hit profits,” she said.
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