SEC Announces Measures
to Facilitate Cross-Border
Implementation of the
European Union's MiFID II's
Research Provisions
Washington D.C., Oct. 26, 2017 — Today, following
consultation with European authorities, and in response
to concerns that investors could lose access to
valuable research, the staff of the U.S. Securities and
Exchange Commission issued three related no-action
letters. These letters are designed to provide market
participants with greater certainty regarding their U.S.
regulated activities as they engage in efforts to comply
with the European Union’s (EU) Markets in Financial
Instruments Directive (MiFID II) in advance of the Jan.
3, 2018, implementation date.
The no-action relief provides a path for market
participants to comply with the research requirements
of MiFID II in a manner that is consistent with the U.S.
federal securities laws. More specifically, and subject
to various terms and conditions: (1) broker-dealers, on
a temporary basis, may receive research payments
from money managers in hard dollars or from advisory
clients' research payment accounts; (2) money
managers may continue to aggregate orders for mutual
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funds and other clients; and (3) money managers may
continue to rely on an existing safe harbor when paying
broker-dealers for research and brokerage.
"Today's no-action relief was designed with input from
a range of market participants to reduce confusion and
operational difficulties that might arise in the transition
to MiFID II's research provisions," said SEC Chairman
Jay Clayton. "Staff's letters take a measured approach
in an area where the EU has mandated a change in
the scope of accepted practice, and accommodate
that change without substantially altering the U.S.
regulatory approach. These steps should preserve
investor access to research in the near term, during
which the Commission can assess the need for
any further action. Cooperation with European
authorities, including the European Commission, has
been instrumental to the SEC's efforts, and I welcome
the additional guidance the EC published today. We
look forward to continued dialogue on this and other
important issues."
www.buysideintel.com
Winter 2017