All posts by PS

12 Nov 2017

Fidelity Adjusts its Fees for MiFID II

Fidelity International announced it would be introducing a management fee model that will allow for variable fees to be assessed for its active equity offering. Its Annual Management Charges and performance fees will be reduced; Fidelity will still charge its client a partial fee for broker research. Fidelity further stated that it wanted to maintain a consistent approach to broker research costs across its global business. For further information, please see:

19 Sep 2017

Firms Remove Research Costs Due to MiFID II

MiFID II continues to shake up the asset management industry, as both Deutsche Asset Management and Franklin Templeton Investments announced that they would pay for external securities research themselves, from their own funds, in reference to the revisions in MiFID II (Markets in Financial Instruments Directive). In this manner, clients will not have to bear the additional costs of external research. They join the list of numerous other firms, such as Aberdeen Standard and Aviva Investors, which have also announced that will pay for external research from their own accounts. Further information may be found here:

26 Aug 2017

Trading costs rise post-Brexit vote

Research recently compiled by ITG (an electronic broker) has discovered that the average cost of a securities transaction has increased six basis points, after the Brexit referendum vote. Investment firms which are already facing budgetary pressures from increased compliance spending, as well as rising market volatility, will now have to absorb the increasing trading costs as Brexit looms on the horizon. Further information on the research compiled by ITG may be found here:

26 Aug 2017

Data transparency problems plague Smart Beta

There is a lack of data transparency in Smart Beta strategies, and investors are seeking solutions to this data gap. A recent survey of over 200 investment professionals found that there were serious issues with data in relation to Smart Beta strategies; chief among these issues was “methodological issues” and a lack of transparency. More information on this survey, and its findings, may be found here:

06 Aug 2017

MiFID II on the Horizon: Are Firms Ready?

With MiFID II on the horizon, the financial services industry is poised to face a new regulatory burden unlike it has seen before. In the past, the majority of regulations focused primarily on the financial services provider undertaking the effort necessary to adhere to the rules implemented by regulators. With MiFID II, however, a firm’s clients must also participate in the regulatory process. MiFID II requires that firms gather, and share, information with their clients; ensuring that their information is correct, and that the clients have in fact been placed into the correct categories. Firms need to ensure that their data systems, and their operations, will be ready to address this new bidirectional flow of information. For more information: “MiFID II: Elaborate Exercise in Repapering”.

28 Jun 2017

Mutual Fund Trading Using Blockchain

Blockchain has recently been utilized in a proof-of-concept exercise to demonstrate that it can be used for fund trading, by the financial technology firm Calastone. The firm seeks to show that the operational costs for the trading and settlement of mutual funds can be reduced through the use of blockchain, also known as distributed ledger, technology. Calastone noted that it will be preparing to proceed to the second phase of its proof-of-concept test. More information can be found here:

28 Jun 2017

FCA 2.0 Could Bring Big Changes to Regs

While Dodd-Frank is likely here to stay, we may see significant changes to it in the near future. The Financial Choice Act 2.0 (FCA 2.0) is a bill being proposed which would serve to curb some of the elements of Dodd-Frank. Notably, the FCA 2.0 seeks to allow banks to maintain to a heightened leverage ratio, which would serve to remove the need to adhere to many aspects of Dodd-Frank. For example, the FCA 2.0 would remove certain limits in relation to mergers and acquisitions activities, as well as eliminate the requirements for bank holding companies (with greater than US$50 billion in assets) to notify the Federal Reserve Board should that company acquire another company that is engaged in financial activities and with over US$10 billion in assets. The FCA 2.0 would also remove the Financial Stability Oversight Council’s designation as a Systemically Important Financial Institution authority. The Federal Deposit Insurance Corporation would see its orderly liquidation authority eliminated, to be replaced with a new chapter within the Bankruptcy Code. Lastly, and perhaps the most significant change, the FCA 2.0 would repeal the Volcker Rule. Further information may be found here: The Trump Impact: Key Issues in Financial Services Reform for 2017, Skadden’s 2017 Insights. Brian D. Christiansen, David C. Ingles, Sven G. Mickisch, William J. Sweet, Jr., Collin P. Janus, Marcel T. Rosner, Brian D. Flynn.

28 Jun 2017

Constiutionality of SEC Admin Hearings Up for Debate

There may be major changes afoot in the future of SEC Administrative hearings: There has recently arisen a split between the 2d and 10th Circuit Court of Appeals. A ruling by the 10th Circuit held that the SEC’s use of administrative law judges was in violation of the Constitution of the United States. The split arose as a result of the case of Bandimere v. SEC, where the 10th Circuit held that the SEC’s Administrative Law Judges hold their positions in violation of the Appointments Clause. If the Supreme Court of the United States grants certiorari and is heard by the Supreme Court, which is likely, the decision handed down by the Supreme Court could result in significant changes in how the SEC prosecutes alleged violations of securities law. With the Supreme Court back to a full bench of nine Justices since Justice Neil Gorsuch’s confirmation, the Court may affirm the 10th Circuit’s ruling. Even if it is not, with a new Chairman at the helm of the SEC (Jay Clayton), the administrative proceedings may see their vigorousness in prosecutions of alleged violations wane. Further information may be found here:

28 Jun 2017

Commerzbank May Outsource Securities Settlement

Historically, we’ve seen businesses outsource certain select departments or services, or poach another firm’s department (i.e., stock lending department, corporate actions group, etc.) and bring that entire group into their business. So it should come as little surprise that Germany’s second largest public bank, Commerzbank AG, is seeking to outsource its entire securities settlement operation to HSBC Holdings PLC in the United Kingdom. Commerzbank has been engaged in a long-term headcount reduction strategy, seeking to eliminate nearly 10,000 full-time employee positions by the year 2020. Commerzbank is seeking to reduce its operating expenses, and the move to outsource its securities settlement operation to HSBC is a strategic move to that end. Details have not yet been officially confirmed as of this time, and the deal is not certain yet, according to anonymous sources at the banks. Further details may be found here:

28 Jun 2017

Operations centers in UK ready for Brexit

With Brexit looming on the horizon, financial service companies in the United Kingdom are setting their sights on other cities to move parts of the operations to, in order to maintain certain operations functions within the European Union. Once Brexit is complete, financial service firms, notably banks, will not be able to offer many of their services and products to European Union investors and clients from their bases in the United Kingdom. In order to remain compliant with European Union regulations, firms are looking towards cities like Dublin and Frankfurt for locations to relocate some of their operations to. The influx of firms and their employees may mean a boom for European Union cities, notably Dublin, seeing a “second wind” after that city’s boom during the Y2K period. For further information, see the Bloomberg Politics article, by Gavin Finch: