13 June 2017

Regulatory Update

To guide our clients through the regulation, we will be writing to all clients later in the summer to explain how these changes may impact your account with JM Finn & Co

To guide our clients through the regulation, we will be writing to all clients later in the summer to explain how these changes may impact your account with JM Finn & Co. In the meantime, this article provides a brief overview as to those areas which are affected.

Our aim is to make any change as seamless as possible for our clients, however there may be circumstances where your investment manager requires additional information from you to help us meet these new requirements. 

The Markets in Financial Instruments Directive 2 (MiFID II) has received a degree of coverage in the financial press, but mostly wrapped up in discussions around the future of financial services in a post-Brexit world. The fact is MiFID II comes into effect in January 2018 and financial services providers will have to comply, whether they like it or not and irrespective of Brexit.



The Markets in Financial Instruments Directive (MiFID) is the cornerstone of the EU’s legislation of financial markets that has been in place since November 2007 and seeks to improve the competitiveness of financial markets by creating a single market for investment services and activities and to ensure a high degree of harmonised protection for investors. The initial directive set out the expectation for conduct of business, authorisation requirements, regulatory reporting, trade transparency and rules on the admission of financial instruments to trading. 

A revised version of MiFID, known as MiFID II, was adopted by the European Parliament in April 2014. This builds on the rules already in place and in light of the financial crisis is designed to improve the functioning of financial markets making them more efficient, resilient and transparent. The directive will be transposed into national law of the Member States in July of this year and applies as of 3rd January 2018. 



As with any regulatory change there are significant challenges for those affected. Directives such as these are written from an industry-wide perspective, but of course all participants in any industry do things differently. We have therefore spent significant time and resource ensuring that we are at the forefront of discussions with industry bodies and our peers to enable the legislation to be implemented in our sector in the most efficient way and in a way that is in the best interests of our clients. At JM Finn & Co we established various working parties to help us plan our approach, but importantly to provide guidance as to how existing and prospective clients might be affected and how we can make sure that our service remains high quality and without interruptions. 



  • Client reporting
  • Costs and charges
  • Transaction reporting
  • Best execution
  • Suitability
  • Clock synchronisation
  • Recording communications

We have tried to summarise the changes by grouping them together here: 


Client reporting

The biggest change that clients will see is the amount and depth of the information that we will provide to you about our services and your investments. Changes to the way investment managers report to clients will be introduced, resulting in more frequent and more detailed reports being sent. 


Costs and charges

A more detailed breakdown of both indirect and direct costs incurred by a client need to be sent on an annual basis. 


Best execution

Not a new concept but transformational for some markets. The aim is to promost market efficiency by driving client orders to those execution venues that offer the best results. 



Requirements for understanding a client’s demands and needs and ensuring that investments recommended to clients are suitable for them have been significantly enhanced. 


Clock synchronisation

The increase in high frequency trading means that in some circumstances clocks have to be accurate to milliseconds, which requires taking a time feed from the National Physical Laboratory.  


Transaction reporting

The amount of detail we have to provide for each and every transaction we undertake on behalf of a client increases dramatically. We will also have to identify who any decision is made by. 


Recording of telephone communications

All communications with clients need to be recorded and retained for a minimum of 5 years. 

    Understanding Finance

    Helping clients understand what we do is key to building relationships. To explain some of the industry jargon that creeps into our world, we’ve pulled together a section of our site to help.

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