MiFID2: Documentation Updates

Transcription

1 MiFID2: Documentation Updates Nick Colston Louise Tudor-Edwards FI & AMIF Autumn Legal Update 2017

2 Introduction what we ll cover today MiFID2 s impact on documentation Legal agreements Internal policies and procedures Our initiatives as a firm Your questions 1 /

3 Overview - MiFID2 s impact on documentation MiFID2 will have a significant impact on legal agreements and compliance documents When providing services, MiFID2 requires: Client agreement Information disclosures Provision of certain (summary) policies Client consent to specific regulatory matters MiFID2 also requires firms to implement internal policies and procedures Some new, some already required under MiFID1 NB: scope of application to MiFID firms vs AIFMs vs UCITS ManCos 2 /

4 Part 1 Legal agreements

5 Legal agreements Client-facing agreements Requirement to provide clients with terms of agreement between firm and client Sell side: Terms of Business Buy-side: Investment Management Agreement / Investment Advisory Agreement Various specific consent provisions under MiFID2 best execution policy execution of orders off-exchange research payment account Various information disclosures information about the firm and its services, and about financial instruments information on costs and charges 4 /

6 Legal agreements Key considerations Method of repapering of existing clients Amended and Restated IMA Regulatory Annex Form of consent - express vs deemed Form of new client agreements for new clients (post 3 January) Is the market reconsidering the contractual status of regulatory disclosures? Dealing with other regulatory changes GDPR PRIIPs Do fund documents need to be updated? Provision of information via a website? 5 /

7 Legal agreements Research-related agreements (if using RPAs) Agreement with client (in IMA?) Policy (to be disclosed to client) Annual disclosure of budget How will RPAs be funded? Research Charge Collection Agreement ( RCCA ) How will research be paid for? Research Purchase Agreements How will research be administered? RPA Administration Agreements Research portal terms 6 /

8 Legal agreements Agreement between sell-side and buy-side Revised Terms of Business from the sell-side Updated regulatory disclosures and regulatory consents An opportunity for renegotiating commercial terms? How to respond as a buy-side firm? Question of legal risk management Rebuttal letter Battle of the forms Key elements of rebuttal letter Regulatory provisions Commercial provisions 7 /

9 Legal agreements Product governance Are you a manufacturer and/or distributor? Manufacturers should consider whether a Co-Manufacturing Agreement is required Consider distribution arrangements Who are you distributors? (NB: wide definition of distributor under MiFID2) Is a written agreement required? Do you need to re-paper existing Distribution Agreements? What about non-mifid manufacturers/distributors? 8 /

10 Part 2 Internal policies and procedures

11 Internal policies and procedures MiFID2 requires firms to implement various policies and procedures New (or significantly updated) policies for MiFID2 may include (depending on the firm s business model and services): Order execution policy Inducements policy / payments for research policy Product governance / product distribution policy Senior management diversity policy Algo trading policy Phone taping policy Complaints management policy Consider whether global policies are still feasible Prioritise client facing policies (e.g. Conflicts / Best Ex / Inducements) 10 /

12 Internal policies and procedures Order Execution Policy Requirement to provide clients with policy summary Increased granularity of instrument classes (22) Inducements / Payment for Research Policy (new policy) Are you paying for research via an RPA? Requirement to agree budget with clients Disclosure of Acceptable Minor Non-Monetary Benefits 11 /

13 Internal policies and procedures Product Governance Policy Product approvals process Target market assessment Responsibility for product governance procedures Phone Taping Policy Who needs to be recorded? Will you permit use of mobile phones? Responsibility for monitoring / oversight 12 /

14 How can Simmons & Simmons help? Elexica briefing note on documents and policies updates for asset managers Menu of fixed fee templates and documents updates Parallel process for hedge fund-related amendments under AIFMD Bespoke projects as required 13 /

15 Amsterdam Brussels Bristol Düsseldorf Frankfurt Lisbon * London Luxembourg Madrid Milan Munich Paris Doha Dubai Jeddah ** Riyadh ** Beijing Hong Kong Shanghai Singapore Tokyo *Sociedade Rebelo de Sousa in association with Simmons & Simmons LLP **Hammad & Al-Mehdar in alliance with Simmons & Simmons 14 /

16 Q&A

17 simmons-simmons.com elexica.com This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmonssimmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address.