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22 May 2014

IMA responses to ESMA’s MiFID II consultation

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The IMA published its responses to ESMA’s MiFID II consultation paper in three areas: the detailed rules on the disclosure of costs and charges to underpin MiFID II; market structure; and the use of dealing commissions in payment for research.

Daniel Godfrey, IMA Chief Executive, said: "The IMA supports consistent and meaningful disclosure of costs and charges across all products, all forms of distribution and all forms of investment services. MiFID II plays a key role in delivering that. The IMA has already implemented a programme to improve transparency for funds, the latest stage of which is the delivery of a comprehensive all-inclusive pounds and pence measure of costs per unit."

Full IMA- response - costs and charges

In response to the detailed market structure rules to underpin MiFID II, Arjun Singh-Muchelle, Senior Adviser on Regulatory Affairs at the IMA, said: "Whilst our main focus is trying to make a silk purse out of the volume caps, we are also looking for a coherent overall approach to market liquidity that works for investors. On the volume caps, there are a number of questions where we need clarification: Who will provide the data? Will a legal requirement exist to provide the data? Who will be responsible for cleaning the raw market data? And how will it then be interpreted and published by ESMA? ESMA must have the responsibility to closely monitor whether the volume cap is having an adverse impact on liquidity. If so, they need to raise alarm bells and put in place an emergency brake. The need for asset managers to trade in large size must be respected. The large-in-scale waiver is as important as the volume caps and must be calibrated sensitively.Going forward, we will work with ESMA to ensure that market liquidity is not harmed by either the volume caps or the other changes to the current market structure."

Full IMA- response – market structure

With regards to the rules for MiFID II on the use of dealing commissions in payment for research, Daniel Godfrey, IMA Chief Executive, said: "The particular conflicts that are a source of concern to ESMA are dealt with comprehensively in the UK by commission sharing arrangements, the increased use of budgeting and governance over the analyst vote. The single most effective move that regulators could make to improve governance around the cost of research would be to require the supply of research to be unbundled and a clear price shown for specific services. It would then be possible for asset managers to assess the value of research to beneficiaries and to manage a more efficient and focused process."

Full IMA- response - payment for research


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