MIFID II – Keeping you informed of the changes that may affect you

29 September 2017

You may have seen reference to ‘MifID II’ in the press.MifID II, which stands for Markets in Financial Instruments Directive II, is new regulation that will be introduced from 3 January 2018 to any firm that provides investment services within the EU or the European economic area.

The new rules are designed to improve the functioning of financial markets, reduce market abuse and improve the information that you receive on the costs and charges of financial products and services.

Given the imminent timeframe, we summarise below how these changes will affect you and the services we provide to you:


Quarterly reporting is a requirement of MiFID II and next year you will receive your portfolio valuation report(s) every quarter/three months. There is no ‘opt out’ option from this quarterly reporting period cycle. However, should you wish to go ‘paperless’ and access your valuations online via our secure client portal, My Brown Shipley, please contact your usual Brown Shipley adviser to arrange. In addition, on at least an annual basis, we will detail the full charges incurred in managing your portfolio, including underlying fund charges and illustrations about the effect on portfolio returns.

10% rule (only applicable to clients with discretionary managed portfolios)

MiFID II imposes a requirement to notify you in the event that the value of your portfolio decreases by 10% or more between reporting periods, and then any subsequent 10% falls within the reporting period. In the event of such a 10% decrease we would notify you on the same business day in which the fall was identified. Please note that the decrease is not affected by any capital withdrawals from, or additions to, your portfolio.

Client data

As part of the global push by regulators to reduce market abuse, MiFID II requires us to use unique codes to identify anyone associated with a financial transaction.

Briefly, for an individual we need a ‘Natural Person Identifier’ (NPI), whether you are a client or acting on behalf of a client. The NPI code is based on nationality and a specific set of identifiers. For UK nationals, the NPI will be derived from your National Insurance number or your first and last name and date of birth. For other nationalities, we will also require details such as a passport number or a tax identifier, together with name and country of residence. We already hold the required data, in a secure environment, for most of our clients; however, we may get in touch if we are missing anything, as it is now obligatory. In line with this data requirement, we have also written to any clients associated with companies or other ‘entities’ who have investments with us, with regards to acquiring a Legal Entity Identifier (LEI). A ‘LEI’ will be used in the same way in which a NPI will in order to monitor and report each financial transaction.

It is important to note that having the relevant NPI or LEI will become mandatory for any person or legal entity wishing to trade investments. Therefore, to enable Brown Shipley to continue to manage your account effectively, please make sure any requested information is provided before 3 January 2018.

Terms and Conditions

As there are various regulatory changes being introduced, including those mentioned above, we will need to update a range of documents, including our terms and conditions, which will come into force in line with regulation on 3 January 2018.

In Summary

The main objective of this new regulation is to further develop consumer protection. Should you require any further information regarding these changes your usual Brown Shipley adviser, supported by our dedicated MiFID II team, are on hand to help; please do not hesitate to contact them.