New investor protection procedures for client sales

Tighter control in the sales process

MiFID II requires tighter control on products, a better understanding of clients and the products they can access, and a much more detailed record of client sales and each transaction.

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New procedures

From a product perspective, you will need to regularly review your financial instruments to ensure they are appropriate for your target markets. This applies both to products that are created by your firm, and those which you remarket.

There are also more stringent requirements on assessing individual clients, especially when providing advice on more complex instruments. This necessitates careful classification and control over clients and the products they are offered. 

In addition, new trading mandates mean that shares and certain derivatives can only be traded on a trading venue. These are not blanket mandates; depending on the circumstances, like the type of counter-party, there are certain carve outs.

As with Dodd-Frank, the list of derivatives coming under the mandate will change over time, so it will be essential to have systems and controls to ensure firms stay up-to-date and compliant.

Tougher transaction reporting requirements

With tougher new transaction reporting requirements, capturing accurate information about clients at the point of sale will be a key responsibility of the front office as the regulation seeks to identify those responsible for trades.

Identifying firms with a Legal Entity Identifier will be a requirement for all companies trading any financial instrument in Europe. MiFID II demands a much better understanding of clients, their structure, and the suitability and appropriateness of products they are offered.

Accurate and timely data

Having the right, up-to-date client and product data to hand at the sales desk will be essential in the post-MiFID II environment and this is where we can help.

We already provide comprehensive product and instrument reference data through our real-time and reference data products.

DataScope Select is a strategic data delivery platform for non-streaming content, which provides:

  • instrument reference data
  • corporate actions
  • legal entity data
  • end-of-day/intraday pricing
  • evaluated pricing services

It already provides a comprehensive view over which instruments fall under the scope of MiFID I and the specific instruments that must comply with the existing transparency regime.

Under MiFID II, DataScope Select will not only be updated with these product scope changes but also each instrument record will come with additional tags that provide information about product complexity and any MiFIR venue trading mandates as they come into force. Much of this data will also be reflected in data available via the Elektron Real Time feed and on the Eikon desktop as well.

Entity Risk identifies and verifies client identity, providing the most complete and comprehensive data source available for understanding complex corporate structures with over 100 legal entity attributes, including LEI and organization type.

This data can be delivered through multiple channels including DataScope, web service APIs or FTP servers.

Fundamentals then builds on client identification data by providing access to corporate fundamental data, giving insight into over 88,000 companies in over 120 countries globally.

Org ID can further build on standardized client data by offering deeper analysis and supporting documentary evidence to help firms with more specific and custom KYC, AML and product suitability decisions.