All news by: James Eldridge

Is MiFID II inadvertently squeezing out smaller brokers?

MiFID II attempts to reduce conflicts of interest associated with research by brokers, but one year on from implementation and many smaller brokers have found themselves under financial pressure. Small and mid-cap firms are facing the burden of complying with the regulation and being undercut by the willingness of the large banks to provide research services at lower cost. 

Restructuring could radically reduce your capital requirements

For some insurers, acquisition activity has created legal entity structures with a number of different underwriting platforms and locally regulated subsidiaries across jurisdictions. This can result in the cost and inefficiency of multiple regulatory rules, relationships and returns and, when the solvency requirements of all the various subsidiaries are added together, an aggregate capital requirement that can be much higher than that of a single consolidated business.

Regulatory intervention: what next for the CFD industry?

An article discussing the concerns raised over the risks posed to retail investors from the provision of speculative products such as CFDs. It has been widely publicised, that the regulators are considering intervention, including possible measures such as leverage limits, guaranteed limits on client losses or restrictions on the marketing and distribution of these products.

FCA raises market stability concerns over disorderly wind downs in the investment management sector

This year, for the first time, the FCA has published its Sector Views document alongside its Business Plan. The FCA’s view of the investment management sector identifies key areas of focus for the industry, including:
  • overpayment of some investment management services;
  • ability of custody banks to meet service standards;
  • products designed for ease of management rather than meeting investors’ needs;
  • disorderly failure or wind down of investment managers or their portfolios.
When winding down funds or investment managers, we have found that the first three issues listed above are often found together. Furthermore, typically, these issues are a result of an investment manager growing quickly while the back office processes fail to keep pace.
 

The FCA’s proposed guidance on wind down planning

In May 2016, the FCA consulted on their proposal to issue a guidance document entitled The FCA’s approach to wind down planning. The Consultation is aimed at FCA solo-regulated firms and is intended to offer an approach to wind down planning.
 
While it is not a prescribed approach, and it does not by itself impose any obligations on firms to create wind down plans, the FCA is currently asking firms whether they have a wind down plan in place when they are seeking authorisation. We are finding that more and more of our clients are now asking for advice and support to prepare their wind down plans.