MiFID II Q&A

1. What is MiFID II?

MiFID II is the latest version of the “Markets in Financial Instruments Directive, a European directive being implemented to make European financial markets more transparent and investor friendly. MiFID II came into force on 3 January 2018. The key aims of it are to:

  • Strengthen investor protection
  • Reduce the risks of a disorderly market
  • Reduce systemic risks
  • Increase the efficiency of financial markets and reduce unnecessary costs for participants

Regardless of the fact that the UK voted to leave the European Union, the Financial Conduct Authority has confirmed that the regulations of MiFID II must be adhered to by UK financial institutions.

2. How it will affect your investment portfolio

The key change under MiFID II will be how investment managers report to clients.

2.1 Quarterly Reporting - Investment managers will be required to send clients a portfolio valuation every quarter. The quarterly reporting dates will be 31st March, 30th June, 30th September and 31st December. Reports will be sent within 25 business days of these dates.

2.2  Who is responsible for the Quarterly Reporting? For all investments held directly with Whitechurch Securities Ltd within our nominee company/account, we will be responsible for providing quarterly reports, as we do now on a six monthly basis.

ONLINE VALUATIONS

In order to receive reports at the earliest opportunity and to reduce the amount of paperwork you receive we would urge clients to elect to receive reports electronically.
This can be set up online, under Client Valuations at www.whitechurchfc.co.uk/switch-e-reports

2.3 If your investments are on a platform It is the responsibility of Whitechurch Securities Ltd to ensure that quarterly reports reach clients. However, where investments are managed on a platform, we may not currently have access to the client information needed to provide the reports.  This varies from platform to platform and we are liaising with all platforms to seek clarity and ensure we meet our reporting obligations.

3. Requirement for 10% Depreciation Reporting

In extreme market environments, if the performance of a client’s investment portfolio decreases by 10% or more since the last valuation point, MiFID II requires investment firms to notify the client by the end of the business day during which it occurred (or next business day if it falls on a non-business day).

3.1 Who is responsible for the 10% Depreciation Reporting? 

For client investments held directly with Whitechurch within our nominee company/account, we will be responsible for providing the Depreciation Reports directly to clients.

3.2 Who is responsible for the 10% Depreciation Reporting on platforms?

Where investments are managed on a platform, we may not currently have access to the client information needed to provide 10% Depreciation Reports. This varies from platform to platform and we are liaising with all platforms to seek clarity on this.

Platforms are also undertaking their own impact of MiFID II and how to communicate the 10% reporting to clients. 

4. Reporting our charges

At Whitechurch we have always strived to ensure that our charges are fully transparent, so nothing will change in this regard. Clients will still receive a full breakdown of fees in the quarterly valuations we will send. 

4.1 New requirements

However MiFID II does bring new requirements with regards to reporting charges.  These are as follows:

  • Pre (ex-ante) sale charges
  • Post (ex post) sale charges
  • Annual charges

To meet these new requirements Whitechurch Securities Ltd will provide this information by way of an Illustration prior to the making of an investment (ex ante). For existing investments we will provide an aggregated total of costs (including underlying funds) annually.

It is the responsibility of your adviser to aggregate their charges to you pre and post sale as well as annually.

4.2 Reporting our charges to clients on platforms

We will provide our charges to the platforms we work with. Advisers will then need to combine these with their fees when disclosing costs to clients prior to investment.

5. National Insurance numbers / Client Identification

As part of MiFID II we are required to have a record of all clients’ National Insurance numbers. This is already required for clients holding pension and ISA investments.

We will be writing to all relevant clients to request this information. If you are a non UK national then we will require other identification, dependent upon nationality, and where applicable, we will also write to such clients to obtain this information.

6. New requirements regarding telephone recording

From the 3rd of January 2018 investment firms are required to record telephone conversations with clients. Investment firms will need to ensure they have telephone recording policies in place and comprehensive procedures for storing these.

At Whitechurch we will record all calls as part of our procedures and will retain the recording where there is the intent to carry out a transaction.

7. Brochures, Applications and Agreements

Due to the MiFID II changes we have updated all relevant literature including client agreements.
These are available to view at www.whitechurch.co.uk .
Any material changes will be communicated directly to clients by post.

Please contact us if you have any questions regarding these details:
Telephone: 0117 916 6175
Email: dfm@whitechurch.co.uk