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MIFID 2 starts soon

December 8th 2017

New rules are due to come into effect in January 2018 aimed at providing greater protection for retail investors throughout the EU. We attempt to explain below what MiFID II is (an acronym for the second Markets in Financial Instruments Directive) and how it will affect the way we manage your investment goals here at ETFmatic. MiFID II comes into effect on 3 January 2018 and also affects our British customers even though Britain is leaving the EU.

The aim of MiFID II is threefold:

  • to provide greater protection for investors
  • to increase transparency
  • to harmonise regulation for investment services across all EU member states

As an FCA regulated entity, ETFmatic must ensure that it adheres to the MiFID II provisions. We have been hard at work in the background to ensure that we are ready to implement the upcoming changes, underwent through an external audit to ensure compliance.

What does MiFID II mean for you, our customers?

We set out below a non-exhaustive list of changes which affect you and the items where we will require your assistance in order to fully comply with the new regulations:

  • We are required to make all the information we provide to you clearer, in several respects, including, among others, our fees, trade costs and execution policy and, to this effect, we updated our Terms and Conditions (T&Cs) which will apply between you and us beginning with 3 January 2018 and will publish them over the following days. You should receive an email notifying you of this, summarising the key changes and enclosing the new T&Cs.
  • We are required to report to the regulator each time we execute a trade on your account. In order to comply with MiFID II rules, we must ask you to confirm your nationality and to provide us with a ‘national client identifier’ - that is your National Insurance number if you are a UK national. If we don’t have this information by 3 January 2018, we won’t be able to trade ETFs on your account. We are writing to you over the coming days to explain how to submit this information so that there shouldn’t be any disruption to your investment goals once MiFID II comes into effect.
  • We are required from 3 January 2018 to send you a portfolio valuation every quarter. We are ahead of time in that respect and going the extra mile by already providing you with a portfolio valuation report on a monthly basis. An additional requirement under MiFID II is that, in the uncommon event that the performance of your portfolio decreases by 10% or more across a quarter, we are required to promptly notify you of this. We will implement this reporting requirement into our usual monthly valuation report.
  • A new report is being introduced which we must provide you with every year, containing details about our top 5 execution venues.

These are a summary of the key changes introduced by MiFID II to give effect to greater protection for retail investors, like yourself. At ETFmatic, we welcome these rules and, in the spirit of our ongoing transparency, aim to keep you updated on any changes we introduce to our services as a result.

Along with this, data protection is being beamed-up into the 21st century with the European Commission introducing the General Data Protection Regulation (GDPR), which comes into effect on 25 May 2018. We can’t wait to offer you an insight into what GDPR is and why it matters to you, in the coming week.

If you have any further questions, as always, you can contact our support team.

With all investments your capital is at risk and the value of your investments and the income deriving from it can rise as well as fall. Past performance is not a guide to future performance.