There are six months to go until the EU directive MiFID II enters into application. The implementation thereof poses challenges, also for external asset managers.

Markus Werner and Rolf Aklin, responsible for the business with external asset managers (EAMs) in Liechtenstein and Switzerland respectively, explain what kind of support LGT can offer them.

What are you hearing from external asset managers when you talk to them about MiFID II?

Markus Werner 505

Markus Werner (MW, pictured above): At this point, MiFID II has become a very prominent issue for all financial intermediaries and is the subject of intensive discussions. Having said that, however, EAMs have widely differing opinions about its impact on their business. Statements from EAMs range from «these regulations don’t affect me» all the way to «MiFID will turn our business model completely upside down.»

Rolf Aklin (RA, pictured below): Also interesting is what external surveys are showing: over 80 percent of the EAMs surveyed believe that they know what impact MiFID II and FinSA will have on their business. At the same time, however, almost half of them indicate that they are not sure which regulatory duties they will have to fulfill in the future.

So what are the concrete needs of external asset managers?

MW: During the fall of 2016, we conducted a market survey of external asset managers together with an external partner. Almost all of the respondents indicated that they want specific, comprehensive information about the new guidelines from their custodian banks. In a first phase, we therefore want to support EAMs in a targeted manner by providing expertise.

We established a website to this end at the beginning of the year that provides clearly formulated information on regulatory matters. Further to this, we hold dedicated events in Switzerland and Liechtenstein and offer a number of different webinars that delve deeper into MiFID II-related issues.

How do EAMs intend to execute MiFID-compliant transactions?

Rolf Aklin 505

RA: Increasingly using their own portfolio management system (PMS). One of the key findings of the survey is that it is very important to EAMs that they retain full control of their data. We are therefore focusing on establishing highly robust and standardized interfaces with select portfolio management system providers. This will enable us to efficiently support asset managers in meeting the regulatory requirements.

We will be able to supply the providers with the necessary data both in a high-quality format and promptly. We are already working on optimizing existing interfaces with a number of providers. In a later step, we want to enable EAMs to submit orders to LGT directly from their application.

Will you also be offering a solution for those asset managers who do not work with an external provider?

MW: Many small and medium-sized asset managers that to date do not use a PMS or CRM application are seriously considering acquiring software support. This should be a comprehensive solution that covers both customer relationship management and portfolio management functions while also reducing the burden of the regulatory duties arising from MiFID II and FinSA to the greatest extent possible.

We are in discussions with a number of providers in this area, and through LGT, will make it possible for our clients to benefit from an attractive and reasonably priced service package that will enable them to meet the future regulatory requirements. We will be offering EAMs the finalized solutions in the second half of the year.

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