How MiFID II impacts on the LGPS

The implementation of MiFID II (Markets in Financial Instruments Directive) reclassifies local and public authorities as retail investors from 3rd January 2018.

Such a reclassification would severely limit both the financial instruments and providers available to authorities for pensions purposes which could be both costly and reduce the potential for returns.

Authorities should consider electing for a return to professional status in order to ensure they can access the full range of vehicles and managers to meet the needs of their investment strategy. The Board along with other stakeholders has successfully lobbied for the opt up tests proposed in the 2016 FCA consultation to better reflect the constitutions and decision making processes of authorities and has worked with industry bodies to develop the standard opt up process below. LGPS administering authorities are strongly advised to make use of this standard process and documentation in order to provide for a smoother opt up.

For information on opting up to professional status, please see the link in the menu on the right.

Legal Entity Identifiers

Firms have new reporting and trading requirement under MiFID that may result in them requesting an LEI (Legal Entity Identifier) from LGPS funds. This will be required on or before 3rd January 2018. For more information on LEIs, please see the link in the menu on the right.