It is rumoured that the UK has secured a financial services deal with the EU and staying closely aligned is likely regardless of the final outcome of Brexit anyway. So ‘equivalency’ is on the cards and MiFID II is, in all likelihood, here to stay in the UK.
However, it has had less impact on fund distribution here than in the rest of Europe because of the prior changes from the RDR. The landscape of fund distribution in Continental Europe has always been very different to the UK and it is now going through significant upheaval.
Distributors, platforms and fund groups have all been affected. Banks and insurance companies are now more likely to offer some third-party funds to their customers. However, this tends to be through a small number of partners, so the concentration of distribution among a small number of asset managers is increasing. Banks typically have a more flexible fund offering on an execution-only basis – but this route to market is yet to take off in most European markets.
We’ve also seen the appetite for passives increase across several markets. The penetration of tracker funds in Switzerland remains strong and is set to grow with their own implementation of MiFID II called FIDLEG. Tracker funds are also growing in the Nordics, where they now capture close to half of net sales. This isn’t a pan-European trend however – there is still little room for them in Italy and Spain, for example.
Our European Fund Distribution: Routes to Market report is out next week. This is compiled for international asset managers looking to identify and exploit opportunities in continental Europe and we are hosting a client webinar on distribution dynamics in a post-MiFID II world on Thursday 8 November. Contact Jean-Luc de Jonge (jeanluc.dejonge@platforum.co.uk) for details.