Nearly three quarters (73 per cent) of asset managers are concerned about the challenges presented by MiFID II, research by State Street Corporation shows.
The survey, which polled 100 global asset managers and alternative asset managers, gauged their readiness for MiFID II coming into force in January 2018.
Designed to increase investor protection, the regulation will include new disclosure requirements linked to costs and charges, new conditions set for the design and distribution of financial instruments and increased pre- and post-trade transparency requirements across equity, equity-like and non-equity asset types.
The survey found more than half (59 per cent) of respondents overall and more than three quarters (77 per cent) of hedge funds believe pre/post trade transparency for in-scope instruments will have the greatest impact on their firms.
“The industry is adapting to a more highly regulated environment,” says Sven Kasper (pictured), EMEA head of regulatory, industry and government affairs at State Street. “More than ever, all market participants must understand proposed measures and be nimble enough to stay on top of changes to market liquidity.”
Kim Newell-Chebator, EMEA head of global markets at State Street, says: “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. Whilst 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.”
Rory Tobin, global co-head of SPDR ETFs, which is part of State Street Global Advisors, says: “The increased transparency of ETF trading and underlying liquidity required by MiFID II will likely only increase confidence – and in turn appetite – in these products further, and as such is a welcome development.”
Regulations like MiFID II, though expected in 2018, are already impacting firms, with 78 per cent of respondents reporting an increase in time spent discussing regulations with senior management and boards.
Overwhelmingly, the need for trusted guidance emerged, with 76 per cent of respondents noting that education would place their firm in a better position to implement changes. The survey also found that to implement regulatory change, nearly 60 per cent of respondents believe better data and analytical tools will help navigate the increasingly complicated landscape.