23 February 2011

ALFI's comments on and responses to the European Commission's consultation on the review of MiFID

ALFI welcomes the Commission’s initiative to consult the public and the financial industry on the review of the implementation of MiFID, in order to assess to what extent the current rules should be adapted. Since the fund sector as such is not directly concerned with all aspects of the consultation, ALFI will limit itself to comments with regard to the sections on developments in market structures, pre- and post-trade transparency and investor protection and provision of investment services.

As a general comment, the questions raised by the Commission aim at clarifying some ambiguities of the currently applicable rules, and assessing whether the MiFID rules should be extended to various instruments and entities due to market developments and experience from the financial crisis, to ensure that there is a harmonised and high level of protection for investors. ALFI wishes to underline, however, that the asset management sector was not at the root of the financial crisis. When bringing any modification to the current regulatory framework to avoid future market failures, one should ensure that the costs of such modification should not outweigh the benefits expected and that it is proportionate in regard of the objective pursued. More particularly, in the context of investment funds, ALFI wishes to underline that most of the principles of MiFID are already fulfilled by UCITS, the 2009/65/EC Directive on undertakings for collective investments in transferable securities (the “UCITS IV Directive”) and its implementing Directive (Directive 2010/43/EC) having endorsed these principles for the vehicles subject to its scope. In particular, it must be noted that certain functions such as the maintenance of the fund shareholder register, which can be delegated to a third party, are purely administrative and ancillary functions. Third parties entrusted with such functions are therefore not to be considered as distributors for the purpose of MiFID. ALFI would also urge the Commission not to adopt rules that would conflict or endanger the UCITS framework and the UCITS brand worldwide. More specifically, they would strongly recommend that the current classification of UCITS as non-complex products under MiFID be maintained. Finally ALFI is of the opinion that any new reporting obligation to investors should be meant to bring real added value for those investors and should not result in an information overkill. Priority should be given to achieving a level-playing field among the financial industry in regard of existing obligations imposed in terms of distribution services and product regulation.

Full comment letter 

© ALFI - Association of the Luxembourg Fund Industry