All EU investment services providers will now have to conform to new industry wide standards. MiFID II covers a large amount of new legislation and we have summarised some of the key areas:
As with MiFID I, MiFID II requires us to categorise you as a client under one of the following headings: retail client or professional client.
Under MiFID II, Local Authorities and Municipalities will be reclassified as retail clients, but may opt-up to professional client status after completing a series of quantitative and qualitative tests.
Suitability refers to the obligation on firms to assess the suitability of any investment services or financial instruments for the client. The reason for assessing suitability is to enable us to act in your best interests.
MiFID II requires that firms take all sufficient steps to achieve best execution when trading with or for their clients and defines the content of specific client disclosures. Our Order Execution Policy and processes have been updated in order to comply with the MiFID II requirements.
MiFID II contains major changes in relation to inducements requirements and how managers are permitted to obtain investment research, particularly regarding payment for research and research budgets. Aberdeen Standard Investments will be paying for research from our P&L and not passing the cost onto clients.
MiFID II extends the current reporting regime by requiring us to provide periodic statements to clients which detail additional specified information regarding activities undertaken and the performance of portfolios.
MiFID II allows firms to enter into transactions in which there may be an actual or potential conflict of interest, so long as firms can ensure that those transactions are effected in such a way that the client is not disadvantaged. At ASI we have worked to produce a single Conflicts of Interest policy that applies to ASI and the two heritage entities of Aberdeen Asset Management and Standard Life Investments.
MiFID II requires firms to provide clients with a broad and detailed set of information, including details about their agreement with the client, the firm itself and the services it agrees to provide to the client, the costs and charges that may be incurred by or for the client, and on the firm’s Order Execution Policy.
MiFID II imposes certain transaction and position reporting obligations on clients in relation to their investments, including the procurement of a valid Legal Entity Identifier (LEI). Clients are responsible for (i) providing all the necessary information and documentation under these obligations; and (ii) taking any action reasonably required by the firm in relation to these obligations.
In order to report details of your transactions, we may need to disclose confidential information to a regulatory authority, via a third party, where such disclosure is required to enable us to assist you in complying with your reporting obligations.
Complaints handling is an area of focus under MiFID II to improve investor protection. The revised rules enhance existing obligations on firms by setting out in detail how we should handle complaints, including rules concerning a complaints management policy, defining senior management responsibility for a complaints management function and the handling of complaints being free of charge.
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