Fund managers struggling to meet new MiFID II requirements

More than half of asset managers are still to provide relevant data for environmental, social and governance (ESG) products to meet the MiFID II regulatory deadline of 2 August 2022, according to analysis from fund data and technology company, FE fundinfo.

MiFID II as well as the Insurance Distribution Directive requires any sustainability preferences of investors to be taken into account during advisory processes for fund managers’ products marketed in the EU.

Data from FE fundinfo shows that fund managers are “still grappling” with this challenge. Although some financial product advisers and distributors are already doing so, sustainable preferences are now mandatory as part of the European green agenda to direct capital to companies who are most active in the transition to a low carbon and inclusive economy.

To help asset managers meet these requirements, industry consortium Financial Data Exchange Templates (FinDatEx) developed the European ESG Template (EET) to facilitate the exchange of data between product manufacturers and distributors across the financial services sector to provide a regulatory overview.

The template comprises a total of 580 mandatory, conditional and optional fields, with additional country-specific requirements making things more complex at a fund and underlying individual share class level.

To meet the requirements of MiFID II, fund management groups should complete both the relevant fields in the EET and also the European MiFID Template (EMT), for which version 4.0 is about to go live, said FE fundinfo.

It added that while the sustainability information is in the EET, groups still need to supply the remaining target market indicators and the costs and charges of their funds.

FE fundinfo noted that the EET is especially relevant for Article 8 and 9 green funds under  the Sustainable Finance Disclosures Regulation (SFDR) but is also relevant for the more traditional Article 6 funds.

Even though Article 6 funds are not likely to satisfy a client’s sustainability preferences they are expected to report the EET.

Given the complexity and breadth of information required, asset managers are also advised to prepare now for the additional fields that will become mandatory to meet annual SFDR reporting requirements that will come into force on 1 January 2023.

©Markets Media Europe 2022

 

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