MiFID II

Introduction

The Markets in Financial Instruments Directive (MiFID) first came into effect in November 2007 and was the foundation of the FSA’s Conduct of Business (COBS) rules. MiFID consists of the Markets in Financial Instruments Directive and the Markets in Financial Instruments Regulation (MiFIR).

MiFID II is the cornerstone of European Capital Markets regulation and considers developments in the trading environment, advances in technology and the need for greater transparency for investors and regulators. The regulations were officially adopted in June 2014 but don’t come into effect until January 2018.

MiFID II is one of the most significant pieces of legislation in recent years. The regulation will touch all areas of the business for asset managers, investment banks, and trading venues and is considered to be one of the most challenging and costly regulatory initiatives to date.

As a regulation, MiFIR is directly applicable to firms and will effectively sit alongside FCA rules as its own mini rulebook - the FCA has no power to transpose the regulation’s requirements.

Our MiFID Regulated Entities

Entity Legal Entity Identifier (LEI) FCA Registration Number (FRN)
SLIL - Standard Life Investments Limited ONN53RF43KDRFCB1J158 188406
SLWL - Standard Life Wealth Limited 5493006SPX6SO7EJ6B87 466684
IISL - Ignis Investment Services Limited 213800GAL1S9UIG83646 121895
AAML - Aberdeen Asset Managers Limited 549300EI2QZDOKF0UR93  121891
AAIL - Aberdeen Asset Investments Limited ITME2JXGKN2DXQ6A9Y56  193707
AISL - Aberdeen Investment Solutions Limited 549300X7T4BU6U8LA778  122130

EMT and EPT Information

EMT

The European Fund and Asset Management Association (EFAMA) has endorsed and published the European MiFID Template (EMT), a MiFID information exchange template jointly designed by product manufacturers, such as asset managers, and distributors.

The template provides a functional description of the minimum set of data (defining a product’s target market, distribution strategy and disclosing its costs and charges) from product manufacturers, such as asset managers, to distributors to help them fulfil the new regulatory requirements. These new requirements come into effect when financial products are distributed after 3rd January 2018.

EPT

EFAMA have also endorsed the use of the European PRIIPS (Packaged Retail and Insurance-based Investment Products) Template (EPT) as a standardised methodology for distributing PRIIPS information between investment firms and insurance entities.

The template provides a functional description of the minimum set of data (e.g. risk and performance calculations, cost and charges information etc.).

Both the EMT and EPT are in a pipe delimited .csv format since they need to be machine readable.

Aberdeen Standard Investments EMTs and EPTs are being hosted by Donnelly Financial Solutions (UK) Limited.

PS 17/20

With effect from 3 January 2018, in response to a request from the governance body of a relevant pension scheme, firms must provide:

  • information about transaction costs calculated according to the ‘slippage cost’ methodology
  • information about administration charges
  • appropriate contextual information

Where firms do not have the relevant information, they must seek it from other firms, and those other firms, where they are Financial Conduct Authority (FCA) authorised, must provide the information.

DCPT & FVPT

A joint ABI/IA working group has developed the DC Workplace Pensions Template (DCPT) and the Fair Value mid-Price Template (FVPT) for the purpose of providing insurers with transaction costs data in accordance with COBS 19.8.4R. DCPT V1.0 was issued in December 2017 and FVPT V1.0 was issued in May 2018.

Best Execution

Best execution means achieving the best possible result for customers when executing their orders.

MiFID II aims at achieving extensive transparency over investment firms’ order execution methods. Moreover, investment firms like ASI are required to install thorough reporting and monitoring mechanisms in order to evaluate whether the execution quality achieved corresponds to the quality promised in the Order Execution Policy (OEP).

At ASI we have worked to produce a single OEP that applies to ASI and the two heritage entities of Aberdeen Asset Management and Standard Life Investments.

MiFID II 2017 Top 5 Reports

Annual publication on specific ‘quantitative and qualitative’ information related to the Top 5 Brokers and venues through which client orders were executed, on a per asset class and per client type basis, is required. ASI has made this annual report available from 30th April 2018. Since Standard Life Investments Limited (SLIL), Standard Life Wealth Limited (SLWL), Ignis Investment Services Limited (IISL), Aberdeen Asset Managers Limited (AAML) and Aberdeen Asset Investments Limited (AAIL) are separate legal entities, their respective Top 5 reports and associated qualitative commentaries are made available per legal entity.

Product Approval Process

The product approval process is integrated into ASI’s Product Life Cycle which governs all new fund launches and their on-going review and monitoring.

ASI’s Product Life Cycle is centred around client needs and requirements. At the product concept and feasibility stage client analysis, in particular target market identification, forms a key part of instigating the product design and overall launch proposal to be approved by the relevant internal and external Boards/committees prior to launch.

On-going product monitoring and reviews are conducted by ASI’s Fund Governance and Product Evaluation team.