Guest blog from Julia Kirkland, Senior Partner at FSTP
If you don’t know already, which of course you do, the Markets in Financial Instruments Directive (MiFID) is EU legislation which first came into effect in 2007. It was created to regulate firms providing services to their clients which are linked to ‘financial instruments’, these being shares, bonds, units in collective investment schemes and derivatives. In addition, it covers the venues where those ‘financial instruments’ are traded.
Fast forward 10 years or so and we have an updated version – MiFID II. This includes the revised MiFID and a new Markets in Financial Instruments Regulation (MiFIR). January 3, 2018 is the day MiFID II must be implemented across Europe.
Now we’re on the cusp of this deadline, the thorny and sensitive topic of Knowledge and Competence (K&C) is bubbling up as a major concern across the industry. We’ve spoken with numerous firms in both the Asset Management and Wealth Management sectors and they have one thing in common; they’re all grappling with the assessment of competence of information providers.
Who is in scope?
In Asset Management, this may cover a wide range of roles from sales teams, client services, broker servicing staff to Portfolio Managers (the really sensitive aspect of K&C). Managers may struggle with the fact they must tell a Portfolio Manager of 20 years plus who hasn’t got a formal qualification, they need to be assessed as competent and in a very short timeframe too.
In Wealth, the scope may cover desk assistants, team secretaries and portfolio assistants who may all be in direct contact with clients, giving them information about prices, valuations, charges and providing generic market or sector views. Additionally, research teams who might attend meetings with clients to provide market, sector or stock views on a non-advised basis may fall under this too. Most of the firms we are speaking to are including research teams. Most of the above staff members have never been included in formal K&C Schemes before but this has changed.
What happens in 2018?
As it stands, information providers not assessed by January 3 will need to be supervised in their activities and oversight of any client interaction must be in place. If you’re not prepared, January 2018 is fast approaching and maybe it’s time to look outside your company for third party support and assistance.
Our guest blogger Julia Kirkland, is Senior Partner, FSTP
FSTP is a training solution provider with expertise in MiFID II and the company also runs workshops to cover Wealth and Asset Management to meet the ESMA requirements and provides advanced K&C assessments for more seasoned, professional staff.