MIFID II: Communication Solutions And The European MIFID Template

In our last article we talked about possible communication solutions for fund manufacturers and distributors. We boiled it down to three main possibilities: blockchain, data repositories, or an industry reporting. Back then (June), a majority of readers voted for blockchain in an informal poll as the best option—but what's on the move is an industry reporting standard.

Introducing the European MiFID Template

In August 2017, the European Fund and Asset Management Association (EFAMA) made a proposal for an industry reporting standard: the European MiFID Template, or EMT. EFAMA states that the "use of the EMT is not compulsory, but a very large number of both fund managers and fund platforms have committed to using it, so there is likely to be pressure to adopt it to provide fund data to distributors."

So, what is the EMT all about?

It's a spreadsheet that is accessible on EFAMA's website, containing 66 items to be filled out by the ManCo as the manufacturer of the fund. The main categories deal with the definition of a target market, the distribution strategy, and the transparency of costs and charges.

The EMT in practice

In Germany, the EMT will be collected and distributed by the service provider WM Datenservice, which will act as a data repository where the EMT will be available for distributers of the fund. This centralised data repository comes with the advantage that communication is streamlined by having just one intermediary. As for Luxembourg, it is currently unclear if a similar set-up will be used. I will keep you posted on this.

What's in the EMT?

Target market definition

From my point of view, market participants are not struggling that much with defining the "target investors" of their products. With the six categories from ESMA, this exercise seems to be pretty straightforward. The current discussion is more about costs and charges.

Costs...