MiFID II: What you need to know
The Markets in Financial Instruments Directive (MiFID) will be evolving from 3 January 2018.
As we mentioned in our introductory blog post last month, MiFID II will be the second iteration of EU regulations that have the aim of further improving transparency, safety and efficiency across virtually all of Europe's financial markets.
While initially devised in response to the financial crisis, this revamped version will primarily seek to expedite the transition of trading from offline to online platforms, where better auditing and reporting can take place.
New information that we require
Firstly, MiFID II means that we will be required to provide increased levels of detail in our transaction reporting. New data points that were not previously required from investors but now are include:
- National Identification number (this is National Insurance number for UK residents)
- Town of birth
- Country of birth
- Country of taxation
If we do not possess these pieces of information for an investor, we will not be able to facilitate transactions – be they purchases or sales – through our platform.
New fields incorporating these points will be added to the investor registration process. If you are an existing registered investor, you will have received emails from us which request this further information. The data required varies by geographical residence so, if you have not yet completed this exercise, please refer to our previous emails to complete the requirements specific to you.
If you have completed our registration process and are unsure about what you may now need to do, please do not hesitate to contact us via the details below. Otherwise, keep an eye out for more emails and guidance from us in due course.
Buying and selling bonds that are already in issue
There will be no changes made to how you invest in new bond issues through our platform, but the mechanics behind buying and selling bonds that are already in issue will change slightly. This has been caused by an expansion of the definition of a ‘Multilateral Trading Facility’ under MiFID II.
The existing process consists of the following steps:
- An investor wishing to sell bonds creates an Offer to Sell
- UKBN reviews the Offer and, when approved, subsequently lists it on the platform
- An investor wishing to buy some or all of those bonds submits an Offer to Buy
- UKBN reviews the Offer and, when approved, sets a date for the transaction to be completed by
- The buyer deposits the necessary funds into their account and the sale is actioned on the transaction date
The new step will come between the existing steps 3 & 4. An email with an attachment containing a summary of the proposed transaction will be sent to the prospective seller. The prospective seller will then need to contact the prospective buyer to agree the transaction via email, and then both parties must contact informing UKBN that they have agreed the transaction, and wish UKBN to settle it on their behalf.
Updates to the Investors' Agreement
Our Investors' Agreement will be amended in line with these developments. A particularly important point will be that, if ever your information changes, you should ensure that you log in to your account and update your profile accordingly.
We will provide you with an updated version upon the launch of MiFID II on 3 January 2018.
Other regulatory news
In May 2018, another new regulatory framework will come into play. The EU's General Data Protection Regulation (GDPR) will replace the Data Protection Directive - widening the scope of rules around the storage, handling and protection of personal data.
The GDPR creates some new rights for individuals and strengthens some of the rights that currently exist under the Data Protection Act (DPA) such as the right to be informed and the right of access. A more expansive definition of ‘personal data’ means that a wider range of personal identifiers will fall within scope, prompting changes in technology and the way organisations collect information about people.
We are considering these new rules in line with MiFID II and will offer further insight in the new year.
Get in touch
If you have any questions, don't hesitate to contact us by phone, by email or via the live chat function in the bottom corner of your screen.
+44 (0)20 3146 4440
13th December 2017
By David von Dadelszen