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Platforms call on advisers to check clients for Mifid II reporting codes

Finance-Concept-Technology-Brain-Money-700x450.jpgAdvisers should not leave it to the last minute to determine which clients need an identifying code to comply with Mifid II, platforms say.

Under Mifid II transaction reporting requirements non-individual clients, such as charities, trusts and companies, must have a legal entity identifier to make certain trades.

Not all financial instruments have to be reported but those that do include company shares, ETFs, VCTs and investment trusts.

Clients that require an LEI must have one when Mifid II comes into effect on 3 January 2018 in order to execute trades or give instructions on trades. Individual investors may use their National Insurance number.

Pinsent Masons partner Elizabeth Budd says: “Without the LEI you cannot transact on behalf of an investor [that needs one]. That will be interesting come January and February.

“Although financial institutions are doing their utmost to get all this information, in some instances they just won’t have it. The gathering of data from the existing books of investors is a difficult task.”

Indeed, platforms are communicating to advisers that they should ensure, sooner rather than later, that their clients have LEIs where required, with some firms even requesting that every client has an LEI even if they will not require one from 3 January 2018.

Standard Life adviser and wealth manager propositions head David Tiller says: “We are communicating that the LEI is a stage one requirement for advisers, because their clients may already hold [the relevant] instruments, or they could do at some stage. Doing a small piece of work now will prevent delays in their trades in the future.”

Tiller adds: “It’s a very straightforward process that only needs to be done once, and we will facilitate the recording of the LEI on the platform.

Doing a small piece of work now will prevent delays to trades in the future. It’s a very straightforward process that only needs to be done once

“We would encourage any adviser told by their platform that the LEI isn’t necessary to query it.”

Novia too has recently contacted its advisers about LEIs. It says it has decided all clients should obtain an LEI immediately, even if they do not require one, because they may do so in the future.

Novia chief executive Bill Vasilieff says: “Someone could come onto the platform and not need an LEI because they are trading only in unit trusts and Oeics. But you never know if, in a year’s time, they will switch to try and buy an ETF or an investment trust.”

He adds: “It will be practically impossible to police it, and certainly not the way that platforms trade, which is all about efficiencies.”

Vasilieff says a “small but significant” minority of Novia clients will be obliged to obtain an LEI under Mifid II rules. However, “we have asked advisers to start collecting the LEI now and not leave it to the last minute”, he adds.

Raymond James is asking only those clients that currently need an LEI in order to trade to obtain one.

Relationship management and business support director Cynthia Poole says: “For many weeks our wealth managers have been working with the clients affected by the Mifid II LEI requirements. LEIs don’t impact all our wealth managers or all our clients. LEIs are relevant to clients that are either a corporate, trust or other structure or entity.

“Furthermore, transaction report-ing is relevant to trades for exchange-traded instruments such as equities, bonds and ETFs.

“Therefore, LEIs are relevant to this sub-set of clients, which have these exchange-traded instruments within their portfolios.”

LEIs can be bought from several bodies, such as the London Stock Exchange.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I think advisers need to check first if they need an LEI first…… Contrary to popular belief, independent firms will need an LEI. MM please would you like to highlight this bureaucratic nonsense? We have an FCA number and now require an LEI.
    (Brewin Dolphin treat us as the client when we introduce business and therefore under MiFID II we need an LEI. And that is just the first example we have found)

  2. Furthermore, as the client of a DFM you, the IFA, are responsible for the reporting requirements to your client under MiFID II. Which is another reason not to use a DFM because of the cost for us in advising the client. Now, who does the client complain to if unhappy with DFM and what about VAT. I think a few DFMs may lose business from IFAs IF this is the case.

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