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The state of play of MIFID II on fund distribution
Journal of Securities Operations & Custody,
10
(2),
117-124
(2018)
Abstract
The implementation of MIFID II has been underway for many years. This significantly affected the distribution of financial products to investors within the European market. The relationship between the manufacturers of the products and distributors has been tightened and now requires more oversight and understanding, as well as new exchanges of information and data. One of the main aims is to provide transparency of the costs borne by investors for the products they hold; this has led to the disclosure of product costs as well as the commissions received by the distributors to the end investors, both prior to and on an ongoing basis. The industry has been working together to standardise these areas and on the whole, this has been a success; but, this has brought about a number of new issues and will need further refinement to be fully understood by a typical retail investor. While the regulation is live, there remain areas that need to be addressed during 2018 to resolve ongoing operational processes as well as the oversight of distributors, to ensure that products are not sold via channels or to investors that are not suitable.
Keywords: MIFID II; regulation; fund distribution; due diligence; negative sales; inducements; product governance
The full article is available to subscribers to the journal.
Author's Biography
Matthew Newnham is based in Stockholm and working at MFEX Mutual Funds Exchange, as the Head of Business Development and Fund Information. MFEX is one of the leading pan-European B2B fund platforms with 821 fund companies and 133 distributors in 21 European countries. He works in many industry groups and is a regular speaker on topics relating to the fund-servicing industry, regulations and fund distribution. Previously, he has worked at Citi, based in Luxembourg, Hong Kong and Australia, in product management roles in fund services, transfer agency, middle office and electronic markets in the Global, EMEA and Asia Pacific management teams. Prior to Citi, he worked at BNP Paribas, Cogent and Henderson Investors in both London and Luxembourg.
