We have one major point to make about MiFID II – don’t be fooled into thinking that you can avoid it because the chances are, if you’re in any way involved in investments, then you’re going to have to take some action as a result of the new rules. There’s no easy way to magic them away, and those indirectly affected probably far outnumber those who are directly covered by the rules.

We were reminded of this last week, with the publication in the FT of a report stating that major hedge fund managers Tudor Investment and Brevan Howard were dropping their MiFID licenses and reverting to pure AIFMs in anticipation of the onerous obligations coming their way with MiFID II.

What was their reasoning? MiFID II introduces a whole raft of costly and time-consuming new reporting requirements for trades and transactions, the cost of which outweighs the specific MiFID activity underway in each firm that led to them having a MiFID licence in the first place.

Here’s the nub – hedge fund managers tend to have some element of their distribution handled via MiFID licensed firms – be they wealth managers, private banks and the like. These MiFID distributors need to get data from their product manufacturers on the Product Governance aspects of MiFID, namely stuff about who the product is aimed at, as well as costs and charges information. In fact, MiFID II obliges such distributors to repaper their agreements with non-MiFID product manufacturers to drive them to deliver and support the end-to-end governance of products as outlined in the MiFID II directive.

For hedge funds, or anyone else in fund management, they’re going to have to make sure they send the right data, in the right format at the right time in order to continue selling their wares through MiFID licensed channels. And let us stress this point again – it’s not just hedge funds, but anyone who indirectly sells their funds into the European market who’ll have to comply in some form with the regulations.

The product governance regime for MiFID II will be considered the best practice approach, and will apply in principle, if not by rule, to pure UCITS and AIFM management companies. A firm would need very good reason not to have implemented what many of the regional NCA will be adopting as the best practice approach.

So with MiFID II it really is quite simple – if you’re already covered by the rules, then it’s time to get everything sorted for 2018. And if you’re not covered, well you probably are anyway, so it’s time to get everything sorted now if you want to keep on selling.