legal . To ensure this was done in a non-disruptive way for daily operations , the business development team in Investment Operations was tasked with running working groups addressing the MiFID II themes with direct impact on these functions , namely around best execution and payment for research . The business development team in Investment Operations has been well positioned for this , as they work closely with the investment teams and trading on processes and strategy .
Organisational process changes to support the front office trading team with the regulatory requirements :
• We have isolated the investment research contribution for each buy / sell order entirely to the portfolio managers . The processes of budgeting costs for research , reconciliation of charges and notification of research budget levels to counterparties as well as choice of research partners are entirely out of the hands of the trading desk . The trading desk is now only responsible for managing execution and the choice of execution partners . This has required a behavioural change where the portfolio managers have taken on the responsibility and process of setting and adhering to research budgets . In addition , it brings savings to our clients , as we have decided to internalise the cost of research across all asset classes . We believe that scrutinising the use of research under the new MiFID II regime will over time bring further cost improvements .
• Transaction reporting is entirely managed and processed internally and under the supervision of the newly established regulatory reporting team in our back office operations .
• We will at least initially rely on our counterparty relationships for trade reporting ( internal and / or external partnerships ) due to technical challenges with getting upgrades to our IT platform .
• We have spent a great deal of time on ensuring that our trading set-up and partnerships allow us the required flexibility and options to meet both best execution and comply with the MiFID II reporting obligations . It is important to us that our counterparties can support us in fulfilling our regulatory obligations , either by being Systematic Internalisers or by offering assisted reporting . Alternatively , we will be able to meet them on our selected trading venues such as multilateral trading facilities .
• Our existing trading technologies and processes were already good enough to comply with MiFID II , but are always in focus for continued improvement and development .
• We have established a Best Execution Committee to enhance our internal governance of our trading activities .
• We have established a new Trading and Investment Support team which takes on many of the old and new operational tasks coming out of trading-related processes in response to both MiFID II and our ongoing focus on being best in class .
While it has been important to keep trading functions close to the project in order to ensure successful implementation , we have managed with our approach to keep trading ’ s core activities as our first priority , even in the sprint up to MiFID II kicking off on 3 rd January .
With the objective of maximising the output of our trading desk , we are continuously reevaluating how the team can add further value to the investment process in the best interest of our clients .
Nordea Asset Management has always developed our best execution procedures , but preparing for MiFID II has resulted in a momentous change management project . With the execution desk in focus , it has required a bidirectional focus on delegating away regulatory administrative processes from the trading desk and optimising how the trading desk can maximise its value in the investment process . We feel confident that we have organised and managed this project in a manner that meets the regulators ’ intent of more robust oversight . At the same time we have ensured that we act in the best interest of our clients .
Nordea Asset Management facts : - The largest asset manager in the Nordics , growing European presence and business - AuM of EUR 221bn as of end-Q3 2017 – growing from EUR 138bn in 2012 ( CAGR of 10.4 %) - 710 FTEs , of which 160 investment specialists
36 www . buysideintel . com Winter 2017