REGULATION

Over half of US buy-side say they will need to comply with MiFID II

SimCorp poll finds just 23% of buy-side in North America are confident they have a plan in place for MiFID II compliance.

By Hayley McDowell hayley.mcdowell@strategic-i.com November 01, 2017 12:25 PM GMT

More than half of buy-siders based in North America have said they will need to comply with MiFID II, according to a recent poll.

Investment management solutions provider SimCorp found 58% of 150 buy-side participants from 68 firms confirmed they will need to adhere to the rules, although just 23% stated there were extremely confident they have a plan in place.

However a significant 77% of those needing to comply stated they are either somewhat or not confident at all of having a plan in place at present, despite the rules coming into effect eight weeks from now.

Complying with transaction reporting requirements, understanding the new market structure and unbundling of research and execution were highlighted as the top three operational challenges for the buy-side firms who were polled.  

Investment firms in North America were recently granted a 30-month no action relief period from MiFID II’s unbundling rules, meaning US brokers will be able provide asset managers in Europe without fully complying with unbundling requirements.

The move by the Securities and Exchange Commission (SEC) was made in a bid to reduce confusion over cross-border compliance, although some market participants deemed it too little, too late.

“The reality is that MiFID II is massively disrupting the global research industry,” said Adam Sussman, global head of market structure at Liquidnet. “The SEC’s narrowly crafted no-action letter is a hollow victory for the long-term viability of the brokerage research business.”

Gernot Schmidt, product manager of MiFID II at SimCorp, explained he was unsurprised by the extent of uncertainty and concern reflected by the results of the poll.

“The ability to aggregate data across asset classes, geographies, business lines and underlying applications will be essential… this holistic approach also benefits the front office with better data for trading decisions and taking advantage of new trading venues emerging in the wake of the regulation,” he said.