Changing Status Of EU Local Authorities Under MiFID II

Asset managers located inside and outside the European Union ("EU") should be aware of the changing regulatory status of EU local authorities, and their pension funds, under the next iteration of the Markets in Financial Instruments Directive ("MiFID II"), that applies on 3 January 2018.

EU local authorities are active users of wholesale financial services, whilst their pension funds frequently invest in funds or engage investment managers to manage their assets. Any EU or non-EU firm that trades with or that is engaged directly by the local authority, or that is marketing a fund or other financial product to a local authority, will be affected.

Change under MiFID II

MiFID requires investment firms to classify their clients as retail clients, professional clients or eligible counterparties, with the level of classification determining the degree of protection afforded to the client. Under the current rules, investment firms within the scope of MiFID may classify