The new EU rule, MiFID II, requires that advisors report all-in costs to clients. SEC Reg BI does not. What will US firms in Europe do?
By Knut A. Rostad and Darren M. Fogarty
The Markets in Financial Instruments Directive II (MiFID II) was put in place in Europe in January 2018. The rule aims to increase clarity in European Financial markets by requiring “providers of investment services” (advisors), to clearly detail how much their products and advice cost. It requires disclosure of projected costs looking forward, and actual costs and charges, for the prior year in absolute and percent terms. The disclosure requirement for actual costs is new, with many firms only coming into compliance in Q1 of 2019.
MiFID II’s standard raises the transparency bar well above the U.S. SEC’s proposed Regulation BI and Form CRS. They only require a list of the tasks and services which will or may incur a cost or charge.
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