“We need more time, because we don’t exactly know what the legislation in different EU countries will end up like,” said Efama-president and board member of the German asset manager Union Investment Alexander Schindler at a press meeting in London on Thursday, without specifying how much extra time he would like to have.
MiFID II is an EU Directive, which means it’s implemented separately in each European member state. Most countries haven’t yet passed the legislation required, let alone started to implement this.
The late implementation would leave asset managers little time to adjust their product offerings to the new regimes, which will likely be different in all countries in the European Economic Area. Some countries like the UK and the Netherlands have already banished the payment of retrocessions altogether, going further than the minimum requirements set by MiFID II. Others, such as Italy, are likely to go much less far.
Efama would have preferred to have seen MiFID II implemented evenly across Europe, said William Nott, vice-president of the organisation and chief executive of M&G Securities. “Delegating the implementation of MiFID II to national regulators has created fragmentation, which is hugely inefficient,” he said.
"Since 2008 we have seen more fragmentation than harmonisation in European financial regulation" - Alexander Schindler
The curse of the Directive
Its implementation has become so complicated precisely because it is a directive rather than a regulation, Nott believes. “MiFID can be gold plated because it is a directive. This is very difficult [to navigate] from an asset manager point of view. It would be much easier if MiFID were implemented evenly across Europe.”
Ironically, one of the goals of MiFID, besides increasing investor protection and transparency, is to create a level playing field across Europe. However, we are not going in this direction, says Schindler. “Quite to the contrary, since 2008 we have seen more fragmentation than harmonisation in European financial regulation,” he said.
However, precisely because the implementation of MiFID II has only just started, we should wait a few years before drawing conclusions, says Nott. It might not turn out as bad after all…