A hundred global asset managers and alternative asset managers were polled to gauge their readiness for the Markets in Financial Instruments Directive (Mifid) II legislation, which is due for implementation in January 2018.
While 73% expressed concern about Mifid II generally; pre/post trade transparency for in-scope instruments was a particular issue, with 59% of respondents overall and 77% of hedge funds saying it would have the greatest impact on their firms.
The survey also showed the extent to which regulation is absorbing time and effort in asset management firms; 78% of respondents reported an increase in time spent discussing regulations with senior management and boards.
Education and guidance
Clear guidance from regulators was deemed vital, with 76% of respondents saying better education would place their firm in a stronger position to implement changes.
The survey also showed nearly 60% of respondents believe better data and analytical tools would help navigate the increasingly complicated landscape.
The European Securities and Markets Authority (Esma) went some way to address this on Friday with the publication of two Q&A documents on market structures and transparency topics under Mifid. These focused on data disaggregation and the mandatory tick size regime.
Kim Newell-Chebator, Emea head of global markets at State Street, said: “The level of reporting required is a significant data undertaking; and tools that facilitate this are of increasing interest to our clients. Mifid II also supports a shift to electronic platforms.
“While a welcome move for modern day trading, venues will need to ensure they have effective safeguards and systems in place to ensure they remain compliant and controlled.”
The survey echoes findings in a recent survey by Investec Wealth & Investment, which found that Mifid II is also troubling advisers.
Over half of UK advisers believe additional regulatory and compliance demands under the regulation will force them to review their business models.
What is Mifid II
The Markets in Financial Instruments Directive (Mifid) is EU legislation that regulates firms who provide services to clients linked to financial instruments; such as shares, bonds, units in collective investment schemes and derivatives.
Introduced in the UK in November 2007, the legislation is being revised, with Mifid II scheduled to come into effect from 3 January 2018.
According to a 2015 article in the Financial Times, Mifid II is one of the most ambitious and contentious reforms introduced by the EU in response to the 2008 financial crisis.
It governs everything from where and how derivatives can be traded to measures to reduce volatility and police potential conflicts of interest among financial advisers.