MiFID II update

Trading in exchange-traded instruments (ETIs)

For client’s investing in ETIs, we require the following information to be completed on the platform.

Firms using Wrap or Elevate under advisory permissions only

• All individual clients that are invested in ETIs must confirm their nationality and provide appropriate national identifiers (NI) in order to trade in ETIs.
• All corporate clients, e.g. trust accounts invested in ETIs, must provide the legal entity identifier (LEI) of the Trust.
• This action is still required if your clients or trusts are invested in ETIs via discretionary portfolios on our platforms, unless those assets are held via the Wrap International Bond or an on-platform third party bond or pension provider on Elevate. Gathering this information is the responsibility of the discretionary manager where assets are held ‘off platform’ via Wrap SIPP.

Firms using Wrap, The Investment Hub or Elevate under discretionary permissions

In addition to requesting the information above for individual clients and trusts, we also require the LEIs for discretionary firms and the NIs for key decision makers within those firms.

Discretionary firms using Elevate, Wrap or Wrap's Investment Hub are able to input this information on the platform.

Firms using the Investment Hub under advisory permissions only

Firms using the Investment Hub under advisory permissions are not required to provide an LEI / NI for key decision makers for their firm. However, we require the information as outlined above for individual clients or Trust accounts regardless of which product the investment is held through.

How do I provide an NI or LEI?

Our platforms have been updated to enable advisers to provide and check the relevant identifiers.

Where to apply for a LEI?

If you believe you need to obtain a LEI there are a large number of service providers who are authorised to issue and administer LEIs, further information on providers can be found online. Note that LEI applications carry an initial application cost and annual renewal costs.

Discretionary portfolio statements and the 10% drop

Discretionary managers (DFMs) and advisers with discretionary permissions are obligated to provide quarterly client reporting. Clients must also be informed of depreciations in the value of their model by 10% (and any subsequent 10%) within each reporting period.

For both Wrap and Elevate, a document which details the valuation drop (in relation to Investment Management Hub portfolios on Wrap and DFM portfolios on Elevate) will be generated in your client’s document library within their platform account and we’ll automatically inform advisers/discretionary managers about the 10% drop and which clients are affected.

Leveraged instruments

Clients are also to be informed when the unit price of their investment in a ‘leveraged instrument’ drops by 10% (and any subsequent 10%). The vast majority of assets on our platforms are not defined as leveraged.

PRIIPs information

Where can I source investment KIDs for underlying investments held in ISA and GIA / Wrap Personal Portfolio?

Underlying ISA / Personal Portfolio investments which are PRIIPS will, in the majority of cases, have a KIID or KID, available on the platforms. For those which do not, please source the KID directly from the provider's website.

On Elevate, access to appropriate fund documentation is available in the IST and research screens.

Client disclosure of costs and charges

MiFID II requires you to provide your clients with aggregated information both pre-sale and post sale.

How abrdn is supporting you

Pre-sale we take all the relevant information from fund managers and present through a charges information document. We also make this information available post-sale on an annual and ad hoc basis.

We also show the discretionary manager fees through the same documents.

Transaction level detail for discretionary models are confirmed in the contract notes.

Product governance and your target market

MiFID II requires fund managers to decide and clearly articulate the target market for their products. They monitor sales to ensure their products are being recommended to the right people.

As a result, advisers must be clear on their target clients and understand the appropriate products and distribution method for them.

How abrdn is supporting you

abrdn will bring together target market data from fund managers, as well as help provide the data required by fund managers to monitor sales.

Target market data

Client suitability

This is about formalising best practice for assessing and reporting on advice to hold a particular fund. The regulation creates a requirement to repeat this each year if your advice is ongoing. It’s worth considering whether you could improve your ‘know your client’ process. Or perhaps review how often you check a client’s attitude to risk and whether there are any specific trigger points (like at retirement).

How abrdn is supporting you

abrdn provides easy access to the investment information advisers need to help support suitability assessments.