We’re committed to ensuring our clients are fully enabled for MiFID II.

The Markets in Financial Instruments Directive is the EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ (shares, bonds, units in collective investment schemes and derivatives), and the venues where those instruments are traded. MiFID II is set to take effect on 3rd January 2018.

We’re committed to ensuring our clients are fully enabled for MiFID II.

We’ve detailed where our solutions already meet the regulatory requirements and where we are making changes to ensure that they will be ready.

Suitability & Appropriateness Requirements

Because MiFID II narrows the scope of products deemed automatically non-complex, the appropriateness test needs to be carried out in relation to a wider range of products.

Bluecoat Software Solution

  1. If you use our solutions for suitability & appropriateness, you already have the ability to capture additional information such as customer knowledge, experience and challenges against advice.
  2. Ability to generate Suitability Reports as part of your periodic Investment Review process.
  3. Introduce a Complexity Flag.

Record Keeping Requirements - Call Recording

Record keeping extended to 7 years.

The FCA amended its proposal to require advisers to record telephone calls under MiFID II by saying they can also make a written note of the conversation. In its policy statement PS 17/05, the FCA said: “Based on the responses received and following extensive industry engagement, we have concluded that additional flexibility for all Article 3 retail financial advisers is appropriate……. As such, the FCA proposes that these firms, irrespective of size, can comply with the ‘at least analogous’ requirement by either recording all relevant conversations or taking a written note of all relevant conversations”.

Bluecoat Software Solution

  1. You can already store and keep records up to and beyond 7 years.
  2. We already provide a solution for call recording, if required.


Transaction Reporting - Summary

Transaction reporting will cover a wider range of instruments, data fields and reportable transactions.

Bluecoat Software Solution

  1. We are developing solutions to extend the number of defined data Transaction Reporting fields as specified in the new legislation.
  2. Our solutions will allow you to input new business and combine the relevant static and transactional data, allowing you to report on these as required.

Client Information - reporting a 10 per cent drop in portfolio value

Firms providing a portfolio management service need to inform clients if their portfolios depreciate by 10 percent.

Bluecoat Software Solution

  1. Where there is a third party custodian we will provide the ability to flag those accounts that have dropped by more than 10 percent and then create workflow processes within the system, to inform the client and create an audit trail.

Complaints Handling

It is likely to be necessary to distinguish MiFID 2-based complaints from others. Firms should adjust their complaint recording arrangements to allow for this.

Bluecoat Software Solution

  1. Bluecoat Software already provides for completely customisable frameworks and supporting workflows.

Other areas...

  • “All appropriate steps” will in future need to be taken by firms to identify and manage any potential conflicts of interest.
  • When an investment service is offered together with another service or product as part of a package, the investment firm will have to tell the client whether it is possible to buy the different components separately (this is known as unbundling) and must provide for separate evidence of the costs and charges of each component.
  • From 3 January 2018, for FCA regulated firms, the UK definition of advising on investments is to be narrowed in line with the definition in MiFID. For these firms, only providing ‘personal recommendations’ will constitute regulated advice.
  • The Directive will put the following obligations on an investment firm:

    to disclose to clients whether or not the advice provided is on an independent basis; and
    to disclose to clients whether the investment firm will provide the client with a periodic assessment of the suitability of the financial instruments recommended to that client.
  • Inducement and adviser charging

    MiFID II will ban independent advisers and portfolio managers from receiving any (non-minor) monetary or non-monetary benefits from third parties when dealing with retail and professional clients.
  • Remuneration policies

    Under Article 24(10) of the MiFID 2 Directive, an investment firm must not remunerate or assess the performance of its staff in a way that conflicts with its duty to act in the best interests of its clients. In particular, it must not make any arrangement by way of remuneration, sales targets or otherwise, that could provide an incentive to its staff to recommend a particular financial instrument to a retail client when the firm could offer a different financial instrument that would better meet that client’s needs.

If you would like any further information please contact the Service Desk on [email protected]

This information is provided for your convenience and you are advised that, although care has been taken to ensure technical and factual accuracy, some errors may occur. No guarantee is given of the accuracy or completeness of information on these pages.