MiFID II: Top Ten Client Questions and How We Can Help
On January 3, 2018, the revised Markets in Financial Instruments Directive and the Markets in Financial Instruments Regulation (better known collectively as MiFID II), will be in effect in the European Economic Area (EEA) and will transform how markets operate. MiFID II aims to create fairer, safer and more efficient markets, greater transparency, and stronger investor protection, and will have implications for market participants both inside and outside of the EEA.
Here’s what we get asked most frequently by topic and how we can help.
The MiFID II research unbundling rules prevent in-scope clients from receiving research unless they bear the cost for that research themselves or pay for it from a separate research payment account funded by specific charges to underlying investors. In-scope entities may not continue to pay for research via bundled commissions. Therefore, effective January 3, 2018, J.P. Morgan will be required to restrict access to all research content so that it is only available to out-of-scope clients or in-scope clients that pay for it on an unbundled basis.
1. If you are not an EEA portfolio manager and do not manage funds for, or provide investment services to, underlying clients, you are unlikely to be in-scope of the research unbundling rules and, if so, you do not need to take additional action to maintain access to J.P. Morgan’s research.
2. If you are an EEA portfolio manager, an independent investment advisor, or an in-scope gold plated entity, and not actively engaged in discussions with us about your research provisioning, but you would like to maintain access to J.P. Morgan’s award-winning research, please register your interest to do so.
The online form should be completed by the person who is responsible for overseeing your access to research. It is important that you register your interest as soon as possible to ensure the least disruption to your research access.
If you have any immediate questions, please do not hesitate to reach out to your representative or email us at MiFID.II.Research.Access@jpmorgan.com.
MiFID II defines an SI as an investment firm which, on an organized, frequent, systematic and substantial basis, deals on its own account when executing client orders outside a Regulated Market (RM), Multilateral Trading Facility (MTF), or Organised Trading Facility (OTF) without operating a multilateral system. Firms that are SIs have pre-trade quoting and post-trade reporting requirements under MiFID II. Investment firms have the ability to voluntarily opt in to be an SI from January 3, 2018, ahead of the first mandatory determination date of September 1, 2018.
J.P. Morgan has decided to voluntarily opt-in to become a Systematic Internaliser (SI) for non-equity instruments, including equity derivatives, that are Traded on Trading Venue (TOTV) and will be registered as an SI in the vast majority of equity and equity-like instruments subject to the MiFID II share trading obligation. For this reason, the SI designation will apply to J.P. Morgan Securities plc and JPMorgan Chase Bank N.A., London Branch.
As always, we remain committed to providing liquidity to the market and making prices for our clients. Even as we all work to implement the extensive, new regulation and prepare for its impact on our products and services, we want to ensure that trading with us remains as straightforward as possible.
Our decision to be an SI will shift the obligation of real-time post-trade reporting from our clients to J.P. Morgan, beginning January 3, 2018 in many cases. On a quarterly basis, we will make available to our clients information about the quality of our execution (including information regarding trades where we have provided a quote but have not executed) and, on an annual basis, we will also make available information regarding our top five execution venues.
Yes, the implication of MiFID II for each product group by asset class varies and we have developed more detailed information for F&O, Cash Equities and Custody & Fund Services. Please reach out to your representative or click here to email.
Yes, depending on the services we provide to you, a material number of MiFID II requirements may affect your business with us, especially where the services we provide to you include any trading activities. We are introducing various changes to our existing processes which will impact the service we provide to you, please contact your J.P. Morgan representative for more detailed information.
MiFID II will have a global impact for a few reasons. First, clients with operations in the EEA will be affected by MiFID II. Second, non-EEA clients may be dealing in instruments traded in European regulated markets or venues, which may be impacted by the new regulation. Finally, if you trade with our EEA entities you will also be impacted.
We are amending our contractual terms for our European entities primarily to reflect the requirements of the revised directive and new regulation. This update is mandatory but we do not anticipate that clients would need to negotiate our amendments or that it will involve any fundamental change to our commercial relationship with our clients. Our clients should have already started receiving these updated terms.
Yes. As of January 3, 2018 J.P. Morgan’s EEA entities cannot transact without having a client’s LEI recorded in its systems.
If you already have an LEI but have not yet provided it to us please click here to email.
If you have not yet obtained LEIs for all of your in-scope legal entities, you can do so by contacting any LEI issuer in the industry LEI FAQ.
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