The Committee for European Securities Regulators (CESR) has issued a second consultation paper on the subject of inducements under MiFID - the receipt or payment by a firm of a fee, commission or non-financial benefit – also known as "softing" - that could place the firm in a situation where it could be seen as not acting honestly, fairly and professionally in accordance with the best interest of its clients. Responses are expected by 27th April and CESR plans to publish its final recommendations by the end of May.
A London-based MiFID pressure group for asset management firms, the Financial Services Discussion Club, has issued a press release claiming that MiFID will severely impact communicating with customers. Chairman Mervyn Taylor from RSM Robson Rhodes LLP said, "It will be important for firms to re-evaluate customer interactions under MiFID, look closely at their distribution channels, and how to assess each customer's appetite for risk and ensure effective and compliant communications." Club members warned that until the regulator had set a precedent in this area, they could not create communications and launch new products with confidence. The Club for asset managers meets every month in London.
Last week, Reuters reported that only three EU member states – the UK, Ireland and Romania – had achieved the end January deadline for transposing MiFID regulations into national law. This leaves non-complying countries open to legal action by the European Commission, a three-stage process that could end up in the European Court of Justice, which has powers to fine a country and force it to change its laws. This has left cross-border firms in a quandary when it comes to implementing their MiFID changes.
The EC made no comment on the Reuters report. A group of financial technology firms have created an alliance to tackle the short timescale of MiFID by offering tailored services. As reported in Bobsguide, the "Open MIFID Alliance" is lead by Sun Microsystems and includes Mobius, edge IPK, Ullink, and Gissing. They hope to recreate the KYC Alliance launched last year with many of the same partners. However the market has shown itself reluctant to commit to such initiatives and there are few, if any, major MiFID programmes that have been outsourced. A similar MiFID initiative, launched by Thales last year, did not create many opportunities.
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