A Negative Obsession?

by James Chu
A Negative Obsession?

Call me cynical, but I think there is an unhealthy obsession on upcoming regulatory changes, namely MiFID II and PRIIPS, in 2018.

These regulations are not like Brexit, which no one knows the final outcome. Most of MiFID II requirements were known as far back as 2015, and the final set of the regulations announced by the FCA in July did not deviate from that materially.

Reyker is fully aware of these regulatory changes. In fact, we will be publishing a Regulatory Update very shortly, and will be providing insights on these.  We are already adopting some of the key principles in PRIIPS in our brochure. When 3 January arrives, we are ready.

Why then, when I go to every conference, read every paper or every magazine, I get a feeling that everyone has only started talking about it recently?

Most of the comments I have seen in conferences and the media are quite negative: questioning why the industry is subject to more regulations, challenging whether the regulations were well thought out, moaning about the cost involved, and spreading doubt on whether the regulations are going to do investors any good.

We do not agree with these views. But it is the last view that I really have an issue with.

If you study these two sets of regulations in details, you will notice that they align with the 11 FCA principles. These FCA principles are all set up with investor protection in mind. Regulated firms in the UK need to abide to these principles already. So are the new MiFID II and PRIIPS regulations, which focus on investor protection. True, they are more detailed and prescriptive than the FCA principles. But I find it hard to argue that adapting these new regulations are difficult when we are already required to adapt similar ones under the FCA principles.

Investment firms should therefore be explaining how these regulations benefit investors now, and embedding the principles into the day to day running of the business. That covers product development, client servicing, dealing, investment management to keeping clients’ assets safe.

Reyker is embracing these regulatory changes positively. We will keep raising our standards and set a high bar for the industry. We will be explaining why they are good for investors. Watch out for our first Regulatory Update, which will soon be published.

James Chu

James Chu

James is Director of the Markets and Investments Team at Reyker. A CFA member and industry expert, James specialises in Structured Products, derivatives and development of service offerings for Reyker. A face at most industry events, James is sure to provide insight into some of the most controversial topics in the market today.