QUICK TAKE: SEC ‘Should’ Offer MiFID II Guidance

Does MiFID II matter for U.S. regulators?

While the buy- and sell-side who actively trade across the Pond are most certainly cognizant of the implications of the Markets in Financial instruments Directive II, U.S. regulators have been much more low-key in their observation of the rule or opinions on it.

So, does it matter from a regulatory standpoint? To a degree, yes. In a recent research note from ITG, the firm reported the Council of Institutional Investors (CII), SIFMA and MFS are urging the SEC to provide clarity on whether U.S. asset managers will continue to be able to pay cash for research.

Recall that in January 2018 the SEC issued a 30-month “no action” letter, allowing funds which are subject to MiFID II unbundling requirements to pay for research with hard dollars, ITG recounted. In its comment letter, MFS asserted that the current state of affairs promotes de facto cross-subsidization, with US investors effectively paying some research costs for EU investors.

“The SEC has been clear that MiFID II is not a top priority, but they will likely offer some guidance in the not-too-distant future so as not to leave asset managers scrambling towards the end of the 30-month period,” ITG wrote.