MiFID II is directly relevant for global asset managers that are based in the U.S. but have a physical location in Europe or the UK. Longer term, global firms are likely to adopt a global standard so they can operate synergistically in all their locations rather than cope with multiple rules, setting new industry best practices.
Determining the reach of MiFID II is particularly tricky in a cross-Atlantic context and deserves attention by US managers offering investment management services on a global basis:
- US firms providing MiFID firms with investment research will need to consider whether they are willing to receive hard dollar payments due to the implications of the Investment Advisers Act.
- US firms that manage European client accounts under a delegation, sub-advisory, dual hat or participating affiliate arrangement may be subject to the MiFID II requirements. For example, US asset managers may need to consider amendments to sub-advisory or other delegation arrangements with EU firms or EU-domiciled funds as they evaluate the potential impact on their US regulatory obligations and organizational structure.
- US based asset managers competing for mandates against European investment firms could also face competitive pressure to adhere to MiFID II rules as clients come to expect the level of transparency they are receiving from asset managers in Europe.
- US based asset managers sending order to EU based brokers
While MiFID II does not place direct obligations on other U.S. firms, the obligations are indirect for US brokers and investment managers that deal with EU counterparties, trade through EU execution venues, or seek access to EU investors. Depending upon the activity, EU firms may need their US relationships to provide additional disclosures and reports and, in some cases, to change business practices in order for the EU firms to comply with MiFID II’s new obligations.
Our highly qualified team of former regulators and experienced consultants can assist with:
- Conducting an impact analysis to enable US firms to identify how MiFID II will affect them directly or indirectly
- Performing a detailed gap analysis
- Advising firms on the implications on the unbundling of research and trade execution services, including possible US adviser registration issues that result from brokers unbundling those services
- Advising US registered investment advisers domiciled in the US or abroad on Form ADV Part 2A disclosures impacted by MiFID II – including the firm’s approach to obtaining or providing research
- Monitoring developments on third-country equivalence and when possible, help you obtain the relevant authorizations to operate under the MiFID II regime
- Advising on the national regulators’ implementation of MiFID II, along with evolving EU-level guidance from ESMA.