Nearly three quarters of asset managers are concerned about the challenges presented by Mifid II, a study suggests.
The survey, conducted by State Street Corporation, polled 100 global asset managers and alternative asset managers, finding 73% listed Mifid II – the updated Markets in Financial Instruments Directive – as their key concern in the future.
Designed to increase investor protection, the regulation includes many disclosure requirements linked to costs and charges, sets conditions for the design and distribution of financial instruments and increases transparency requirements across equity, equity-like and non-equity asset types.
The survey also found 59% of asset managers and 77% of hedge funds felt pre/post trade transparency for in-scope instruments will have the greatest impact on their firms.
While MiFID II is scheduled to come into force in 2018, it is already impacting firms with 78% reporting an increase in time spent discussing regulations with senior management and boards. The need for trusted guidance has also come to the fore recently, with 76% noting education would place their firm in a better position to implement changes. Nearly 60% also believed better data and analytical tools will help navigate the increasingly complicated landscape.
State Street used the research to highlight what it sees as a role for ETFs in the MiFID II world. Rory Tobin, global co-head of State Street Global Advisors’ ETF division, SPDR ETFs, said MiFID II’s emphasis on increased transparency of trading and underlying liquidity were supportive of the products.
His comments reflect widespread anticipation that the regulation will boost the fortunes of ETFs in Europe, which have significantly lagged the US.
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