under MIFID II Joris Lauwers KBC Asset Management September 26 2017 Target Market EMT ESMA Guidance date only from June 2017 Sector initiative European Mifid ID: 1030101
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1. ECMI WorkshopInvestor Protection under MIFID IIJoris Lauwers, KBC Asset ManagementSeptember 26, 2017
2. Target Market - EMTESMA Guidance date only from June 2017Sector initiative: ‘European Mifid Template’ gives clear guidance for manufacturers and UCITS or AIF management companiesWorks well in practice to classify funds, less easy for other types of productsElements to clear out furtherEg What is exactly ‘capital preservation’ ?Eg How to assess ‘leverage’ ?
3. ESMA requires the use of PRIIPS SRI and UCITS SRRIBoth score risk on a scale from 1 – 7UCITS SRRIMarket VolatilitySmaller Volatility bandsPRIIPS SRIMarket Volatility & Credit RiskWide Volatility bands (~ VaR equivalent Volatility)Typical Equity fund has an PRIIPS SRI of 4 and a UCITS SRRI of 5 or 6 Confuses distributors and ClientTarget Market Risk Tolerance Assessment
4. Product Currency versus Investor Home CurrencyKBC client centric ‘product score’Stand alone product approach versus Portfolio approachBridge betweenProduct Manufacturer and Distributor
5. PRIIPS / MIFID2 / IDD / Differences in national legislationsExamplesWhy different notions to calculate costs ?Different notions on ‘complex products’PRIIPS comprehension alertMIFID notion of complexity (structured fund AIF)Belgium: moratorium on unnecesary complex productsRegulatory PatchworkDoes it enhance investor protection?
6. Standardised / automated for mass retailStructured and standardised advise processDigital transformation in financial sectorNew digital players ?Execution onlyIndividualised for top segmentFor those who are willing to pay for itPersonal quality serviceWherewill it lead us from here ?
7. How we interact with the investorProtected Investorsuitability and appropriateness assessment by adviserInformed InvestorKey information documentsEducated InvestorLet us focus much more on financial literacyRegulators, Industry, goverment must play their roleHow we organise the financial marketRegulatory convergenceBetween memberstatesBetween different regulatory streamsSuggestionsHow can we improve ?