In January 2018 the MiFID II regime will come into force, and with it a new set of challenges for firms across the breadth of the investment management and distribution landscape. MiFID II raises specific challenges in terms of data exchange between various market participants. Without a platform to intermediate data exchange, complex N-to-N data exchange will permeate the market and drive inefficiency in an area already fraught with complexity and scalability challenges. The three specific areas in MiFID II that Silverfinch will provide solutions for are product governance, cost and charges and Know-Your-Distributor.
Manufacturers must communicate target market information to their distribution network. In return, distributors of investment products must also communicate target market exception sales reports back to the primary manufacturer, to comply with the end-to-end product governance and oversight mandated by MiFID II. This places specific challenges on the industry as a whole, as distribution networks are highly intermediated, cross border, and thus complex in nature.
Silverfinch will support standardised exchange of target market data from manufacturers to their distribution network, and the communication of target market exception reports from distributors back to manufacturer.
For product manufacturers Silverfinch offers a single location to publish all target market data for distribution partners to consume, while also facilitating centralised target market exception report collection in consolidated form across the breadth of their distribution network.
For distributors, Silverfinch offers a centralised point for target market data collection to collate and aggregate all target market data across the range of product manufacturers in their offering. Additionally, Silverfinch assists distributors in efficiently tackling the upward and downward exchange of target market data between entities that sub-distribute, or to whom they provide sub-distribution services. By leveraging Silverfinch as the go-to location to exchange target market data for products and exception reporting for manufacturers, the massive challenge of product governance in MiFID II becomes an efficient,scalable and manageable process.
Costs & Charges Disclosure:
MiFID II mandates the disclosure of costs and charges data prior to investment. Much like the similar PRIIPs regulatory requirement, this data must be produced and then passed from the manufacturer through to the distribution network such that it is available for publication to the investor prior to investment execution.
Silverfinch will support standardised exchange of MiFID II cost & charges data from manufacturers to their distribution network using industry mandated templates. It is likely that PRIIPs, MiFID II and LGPS (Transparency in UK Workplace Pensions) costs and charges data will follow a standard exchange template, which Silverfinch is fully committed to supporting.
Along with the stricter product governance requirements proposed by MiFID II, manufacturers must demonstrate they have a deep understanding of their distributors. It is expected that this will manifest itself in ongoing ‘Know-Your-Distributor’ due diligence that will take place between manufacturers and their distributors. As manufacturers tend to work with tens of distributors, and distributors can oftentimes work with hundreds of manufacturers, this presents a unique challenge within the industry to manage efficiently.Silverfinch will support the set of emerging DDQs(’Due Diligence
Silverfinch will support the set of emerging DDQs(’Due Diligence Questionnaires’) templates to enable a scalable, industry led approach for the efficient delivery of DDQs to relevant distributors, as well as facilitating DDQ response sets for distributors; unique RFP answer sets can be applied to the various DDQs they receive, regardless of the source template, to enable automated response to DDQ requests.