Timing and Substantive Concerns Related to No-Action Relief for Dealing Commissions
Summary
SIFMA AMG appreciates the continued dialogue with the Securities and Exchange Commission staff regarding our members’ concerns related to the cross-border implementation of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (“MiFID II”).
We understand and recognize broader industry concerns related to ongoing regulatory requirements resulting from MiFID II, and believe that investors would be best served if asset managers were able to choose a payment arrangement for investment research that makes sense based on the individual circumstances.
Excerpt
The Honorable Walter Jay Clayton
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Timing and Substantive Concerns Related to No-Action Relief for Dealing Commissions
Dear Chairman Clayton:
The Asset Management Group (the “AMG”) of the Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the continued dialogue with the Securities and Exchange Commission (“SEC”) staff regarding our members’ concerns related to the cross-border implementation of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (“MiFID II”).
We understand and recognize broader industry concerns related to ongoing regulatory requirements resulting from MiFID II, and believe that investors would be best served if asset managers were able to choose a payment arrangement for investment research that makes sense based on the individual circumstances. Currently managers may only pay cash to U.S. brokerdealers for research if they are required to do so by MiFID II or equivalent regulation. Even this exception will only continue to be an option if the SEC or its staff extends its temporary relief for payments for research from all ‘institutional investors’ through a formal rulemaking, interpretation or guidance, unless such broker-dealers elect to register as investment advisers. However, regardless of how the SEC chooses to proceed, our immediate and perhaps more pressing concern relates to the temporary nature of the dealer’s no-action relief letter that was issued by the staff last fall.2 We believe it is critical for the staff to provide clarity quickly regarding whether it plans to issue extended and/or permanent relief. As discussed in our meeting earlier this fall, should the SEC decide not to extend the relief, industry participants will need time to implement the changes necessary to meet regulatory requirements currently stayed by the SEC’s temporary relief.