Panel: MiFID II now the dust has settled – 9 months on, what have been your biggest wins and lessons learned?

Moderator:

Henry Raschen, Head of Regulatory Engagement, HSBC Securities Services

Panel:

Darryl Cornelius, VP, Head of European Regulatory Projects, State Street Global Advisors

Kyra Brown, Senior Regulatory Change Specialist, Aberdeen Standard Investments

Vincent, Dessard, Senior Policy Advisor, EFAMA

Katy Stevens, Global Lead, Regulations, M&G Investments

One panelist explained the trade and transaction reporting requirements have been a huge lift for operational teams for both the business and the industry industry. By fluke or design, this has brought asset managers into scope where they had previously relied on the sell side. He questioned whether they have contributed to price transparency is open to debate, but it has been a huge bill for them to implement the infrastructure to support reporting.

Another panelist agreed, as the enormous increase in the number of reporting fields, and the fact you have to report on a line by line basis means at some point in the future asset managers will be fined for minor reporting errors. The FCA has not done much so far to penalise, but have been pointing out where the common errors are. The FCA patience with reporting errors is coming to an end as they have made it clear egregious reporting will not be tolerated.

Conversely, the panelist from EFAMA said the approach is more relaxed in France because they seem to be pushing more for practical solutions. The French authorities are also drafting proposals that could carve asset managers from the Mifid scope for certain rules. This is similar to authorities in Spain and Italy who want to protect asset managers from the negative impact of MiFID II.

However, there is a commerciality to the regulation, with one panelist suggesting it has encouraged them to look at customer experience. Clients want transparency over fees and costs, so it is encouraging us to provide the best experience. She explained they are stepping back and seeing how they can use the regulation to their advantage.

There is also a question of RegTech firms among the buy-side. Many of these firms that have sprung up from the regulation have no track record and no clients yet. Many firms are in a budgeting phase to explain what regulatory investments they are going to make, both internally and externally. But with the regulatory horizon expected to reach beyond 2020, it is difficult to articulate what their costs are with the rules constantly moving and changing.

Political Keynote: The regulatory domino effect: With the possibility of MiFID III on the horizon what new reforms should you expect to prepare for going forward?

Dr Kay Swinburne, MEP & Vice-Chair European Parliament's Economic & Monetary Affairs Committee

Do not fear MiFID III. It is further away than you might think and it will not be on the same scale as MiFID II.

Updates will be more about refinement and realignment as opposed to a re-write, and concerned with removing inconsistencies.

Moves to harmonise by the EU will likely be introduced as separate amendments. Swinburne doesn’t think they will be tied into a MiFID III package. Much discussion has gone into how to reconcile GDPR – with data retention requirement in MiFID.

Swinburne believes there are things that can improve on MiFID II. Access, consolidated tape, competition as new entrants arrive.

MiFID II was not a post-crisis piece of work. The driving force was the desire to bring the benefits of MiFID I to a wider range of asset classes. Swinburne said these aims get lost when we explain the complexity of the regulation.

Fireside Debate: True or False? Financial market regulation has had an overall positive effect on the financial landscape after almost a decade of reform

Moderator:

Stephen Fisher, Executive Director, Regulatory Policy, Blackrock

Panel:

True: Stéphane Janin, Head of Global Regulatory Development, AXA Investment Managers

False: Daniel Sandmann, Head of Customer Protection, Allianz Group

At the beginning of the debate, around 68% believe post-crisis regulation has had a positive effect on the financial landscape.

On the side that the crisis has had a positive effect, the head of global regulatory development for AXA Investment Managers said legislation such as AIFMD and UCITS has dealt with extreme market events, including Brexit and the euro sovereign debt crisis.

On the opposite side, Allianz' head of customer protection advocated that the new normal post-crisis reform has pushed, such as ultra low interest rates, has had a negative impact on products. It has meant the role of alternative products have changed completely, making it more complex for firms to deal with new assets and markets.

The problem with illiquid assets, he explained, was that when Lehman collapsed, all of their assets which were deemed liquid became illiquid very rapidly. He said the good intent is there with the regulations, but every institution needs to do their homework.

Going forward, AXA's representative warned the EU regulatory framwork is in danger of politicians becoming too involved, suggesting some are already proposing reviews of the AIFMD and UCITS framework.

By the end of the debate, 74% of the audience believe regulation has had a positive impact.