If the role of the EU’s Financial Services Action Plan is to harmonise financial services across Europe, then MiFID II is, so far, hardly a roaring success. National interpretations of the rules differ, there are carve outs for segments of the industry and lobbyists across different countries have established different local definitions of ‘independence’ with regards to financial advice. To unpick this at a pan-European level is a mammoth task, requiring the processing of significantly more data than pre-MiFID II.
To some extent, platforms are at the centre of a new ‘data universe’.
Platforms have pointed to the vast data required for funds’ EMTs (European MiFID Templates), with hundreds of data points per share class needing to be gathered and validated. Regulatory requirements have increased asset managers’ need for deeper target market data. And with platforms being the main custodians of data, regulations aimed at other market participants tend to impact platforms too – such as the 10% drop notifications required from discretionary managers.
ESG is another area under discussion, with regulators looking at making it easier for investors to compare the sustainability of their investments. This adds yet another dimension to the data that platforms would need to carry.
Ultimately, the greater need for data plays right into platforms’ hands. ‘Distributors’ of funds (advisers, private banks etc.) who don’t currently use platforms are being slowly forced in that direction, as new regulatory requirements become too much of a burden for their creaking in-house technology (or paper!).
We will be publishing our European Fund Distribution: European Platforms report in June. If you work for a fund provider and regularly deal with platforms, we would like for you to answer a short survey about how your organisation engages with European fund platforms. The link to the survey is here.